Vacant Cost Recovery Closes the Gap on Apartment Utility Costs

As if resident turns aren’t already costly enough, hidden apartment utility costs incurred when water, gas and electric bills aren’t transferred to a new resident can add to the pain. Billings not shifted from one resident to the next and not detected quickly can amount to thousands of dollars across a property or portfolio. So it’s no wonder so-called “vacant cost recovery” has become a hot button in the industry. The average cost of a single turn can climb upwards of $1,800 when considering loss of rent and maintenance expenses, according to the National Apartment Association. And if the resident does not assume responsibility for utility bills immediately upon possession of the apartment, the costs typically land in the property’s lap. It’s not uncommon for about 25% of residents to delay transferring utilities for a newly rented apartment into their names. The frenzy of moving out of one place and into another may contribute to a lapse in making the billing switch. Some, however, may intentionally delay moving water, gas and electric bills to take advantage of continuous service agreements properties have with utility companies. Others switch out utilities from their names well before moving out to save on that final monthly bill. In either scenario, a multifamily property without a vacant cost recovery plan can get stuck footing the bill. “If there are properties that aren’t managing their utilities closely, the costs associated with a resident not transferring accounts into their name can get very expensive,” says Mark Coffman, RealPage SVP of RealPage Utility Management. “It can be several hundred dollars per month.” An eye on the utility transfer process Typically, residents transfer utilities within one to three days after move-in, says Coffman. Ideally, they should be done by the first day of occupancy. During this span, the property might only be on the hook for $20 or $30 whe...