Daily Archives: July 24, 2023

Provided by Rent Magazine

Property owners have been able to benefit from tight rental markets and rising rents for the last several years.
The COVID pandemic caused tremendous increases in rents in places like South Florida and Texas as people fled the density of the Northeast and restrictions in California. No one could have predicted the tremendous impact that COVID would have on the housing market. But now the rental market in the US is in flux.

STATE OF THE RENTAL INDUSTRY

The number of people paying 40% of their income to rent is the highest ever. The recommended proportion for financial health is no more than 25 to 30% of income to rent. It’s understandable that a market correction was coming, and it appears to be here.

In the face of rising rental prices, more states, including hot spots like Florida and Nevada,
are discussing rent control measures. Places like Pasadena, California, recently passed a controversial rent control measure, the fallout of which is yet to be seen.

Meanwhile, October 2022 saw the third largest drop in rental market prices since 2010. Housing providers and residents alike are being squeezed by inflation that, while slowing, is still much higher than we’ve seen in recent years, causing people to stretch every paycheck further.

RECORD BREAKING UTILITIES COSTS

On top of all of that, conservation concerns and supply/demand dynamics are driving ever increasing utility costs. From 2010 to 2019, water prices went up by about 60% for a family of four. Electricity costs have spiked recently, partially due to the current crisis in Ukraine, and those costs are expected to increase.

Per a recent piece on CBS News, “About 20% of U.S. households have missed or made a late payment on their utility bill in the last month,” according to a recent Bank of America report. Not surprisingly, families with an income of $50,000 or less are struggling the most to absorb higher energy costs. Geographically, residents of Dallas and Houston are seeing some of the highest utility bill hikes this summer — up 23% when compared to the same period last year.

“Higher energy prices brought on by the Russia Ukraine war are partly to blame for the late or missed payments,” BofA said. “Customer utility bills rose about 16% in August compared to the same month a year ago,” according to the report.

The increases are expected to continue as National Grid, Con Edison, Florida Power & Light and other power companies have already signaled their plans to raise prices. Earlier this month, the National Energy Assistance Directors Association estimated that the average household will pay about 17% more this winter to heat their property, a 10-year high of about $1,200 per home.

Electric bills are also set to rise, with the U.S. residential price of electricity expected to climb 14.8 cents, a 7.5% jump from 2021, according to the U.S. Energy Information Administration.

HOW TO RECOUP COSTS

“We know housing providers are stressed by the shift in the economy,” says Daniel Sharabi, CEO of Livable. “At Livable, we know that conservation education can help save those property managers on their out-of-pocket costs on utilities, while at the same time, we have innovative programs that can help them recoup much of those costs.”

As a housing provider, you want to do the best you can for residents, but you have to focus on your own bottom line as well. If you’ve been paying for master-billed utilities, even just water, it’s in your best financial interest to try to recover some of those costs, especially if you can’t raise rental prices to cover them in a softening market.

You could switch to individual submeters for every unit you own, but that involves pricey equipment installation, and supply chain disruptions mean itmay not be an immediate solution anyway. But there is good news! Ratio Utility Billing Systems, also known as RUBS, give you the opportunity to fairly recover up to 90% of the costs for any master-billed utilities you pay in your investment properties. That can include electricity, gas, water, Wi-Fi, high-speed internet access and cable.

With RUBS, you simply provide all the information about your properties and any shared amenities, and the algorithms do the rest. You can fairly and accurately share the costs among your residents based only on what they use. Not only do you recover your costs, but knowing what they are using drives residents to conserve. That’s better for their wallets – and yours – and the health of the planet!

If you’re not ready for RUBS (or prevented from implementing it for some reason), a Sample Statement showing residents what they WOULD pay can also drive conservation behaviors, even if they aren’t spending any money directly. A study by the EPA showed that the simple act of informing people of the costs of their habits will cause them to reduce consumption by up to 15%! Bonus: What’s good for your wallet is good for the planet.

“RUBS is easy to implement. It takes very little time to get started, and our enrolled housing providers start seeing recovered costs in as little as 60 days. We don’t require a minimum number of units to get started, so it’s ideal for those with even just one unit to manage,” Sharabi says. “Sharing accountability for consumption among housing providers and residents helps preserve our precious natural resources at the same time, thus reducing use of both water and energy.”

“As the rental market continues to be in upheaval, it’s in the interest of housing providers to work on recovering master-billed utility costs now,” Sharabi explains. “Not every market has been affected by a correction yet, but it will happen. The time to get ready is now, especially for independent rental owners with a smaller number of units who don’t have the resources of a major corporation behind their investments.”

Written By: DANIEL SHARABI
CEO & Co-founder, Livable
Daniel Sharabi is the CEO & Co-founder of Livable, a utility management company with software
solutions designed to save money, as well as the environment. Daniel’s immersive experience
working within a multitude of sectors in Silicon Valley offers a homegrown advantage in his vision
of leveraging technology to provide benefits for all: the property owner, property manager, the
tenants, and our environment.