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In real estate investment, maximizing property value is a perpetual goal. Among the many factors influencing property value, the relationship between Ratio Utility Billing System (RUBS), Net Operating Income (NOI) and property valuations has significant influence. In this article, we’ll delve into the dynamics of RUBS, explore its impact on NOI and property valuations and examine implications for communities through a comprehensive case study.

RUBS is a billing system that can minimize utility costs as an operating expense for multifamily properties. RUBS helps property owners save money on utilities by dividing the cost between residents based on unit size, occupancy and usage patterns. Conservice and Livable are two prominent Multifamily Utility Management Service Providers (MUMSPs) that play pivotal roles in facilitating efficient utility management solutions like RUBS.

  1. Conservice: As one of the nation’s largest MUMSPs, Conservice specializes in delivering comprehensive utility management services to multifamily properties. Their expertise spans billing, submetering and utility cost recovery solutions. Conservice empowers property owners to optimize utility expenses effectively.
  2. Livable: Livable is a software-based utility billing company that offers innovative billing solutions tailored to the needs of multifamily properties. Their cutting-edge software streamlines utility billing processes, enhances transparency and enables seamless communication between property owners and residents.

Strategic Sanitation Services, Inc., is Southern California’s premium trash management provider. In collaboration with Legacy Acquisitions, Strategic conducted an analysis of the annual Profit and Loss Statements for a random, Southern California portfolio of multifamily properties to assess utility cost management practices.

The findings revealed that the average annual utility cost per unit amounted to $1054. However, only $467 of this cost was being recovered through RUBS at this portfolio, representing a mere 44.3% recovery rate.

Based on information gathered from Conservice and Livable and corroborated by a large property management company in SoCal, it is likely that most communities can recover 90% of utility costs using RUBS.

For the portfolio analyzed, a 90% recovery would mean an additional $491 per unit per year through optimized RUBS strategies. This example analysis presents a significant revenue opportunity for property owners. For a community with 150 units, a 90% recovery translates to a potential increase in NOI of $73,650 annually!

In today’s competitive real estate market, where property owners are seeking to refinance properties amidst a tight lending market, higher property valuations are essential to secure funds. Optimizing RUBS recovery from 44.3% to 90% of utility costs can lead to a substantial increase in property valuation at a cap rate of 0.04.

In conclusion, the relationship between RUBS, NOI and property valuations underscores the importance of strategic utility cost management to maximize property value. By working with service providers like Conservice and Livable, property owners can unlock hidden value, enhance NOI, and position their communities favorably in the real estate market. As the industry evolves, mastering these key metrics and efficiencies is essential for sustainable growth and long-term investment success.

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