Most property managers are laser-focused on occupancy, rent growth, and expense control.
But there is one category quietly draining NOI year after year: utilities.

Not because rates are high. Not because residents are using too much water.

Because the billing strategy is either missing, manual, or mismanaged.

If you manage multifamily properties, here are five common ways revenue slips through the cracks and what those missed dollars can actually cost you over five years.

 👉 Download the full 2026 Utility Outlook to see how your markets are trending

1. Not Recovering Utility Costs at All

This is the biggest missed opportunity in multifamily.

Many properties still include water, sewer, trash, or gas in rent. It feels easier. Fewer line items. Fewer resident questions.

But simplicity comes at a price.

What it really costs

Let’s look at a conservative example:

• 100-unit property
  
• $75 per unit per month in utility costs (water, sewer, trash)
  
• No cost recovery in place
  

That’s:

• $7,500 per month
  
• $90,000 per year
  
• $450,000 over five years
  

Nearly half a million dollars absorbed as an operating expense.

Now consider property value. At a 6 percent cap rate, $90,000 in annual NOI equals:

$1.5 million in asset value.

Utility billing is not administrative work. It is an NOI lever.

And yet many properties leave it untouched because it feels complicated or risky.

2. Under-Recovering Through Poorly Structured Billing

Some properties attempt cost recovery, but the structure leaves money behind.

Common issues:

• Flat fees that do not reflect actual usage
  
• Outdated ratios that no longer align with occupancy
  
• Not billing for all recoverable services
  
• Inconsistent enforcement

Even a $20 per unit monthly shortfall at 100 units equals:

• $2,000 per month
  
• $24,000 per year
  
• $120,000 over five years
  

That is real money quietly leaking from your operating margin.

A properly structured RUBS model or billing system ensures costs are allocated fairly and consistently, without creating unnecessary friction.

3. Manual Processes That Create Errors and Write-Offs

Spreadsheets. Manual uploads. Double entry. Late statements.

It feels manageable, until it isn’t.

Manual utility billing often leads to:

• Missed charges
  
• Delayed billing cycles
  
• Incorrect allocations
  
• Staff burnout
  
• Resident disputes
  

Each error creates administrative cost and, often, revenue loss. Charges get waived. Adjustments get made. Collections get harder.

And your team spends hours fixing issues instead of focusing on leasing, renewals, and resident experience.

Over five years, the cost of time alone is substantial.

If one team member spends just 8 hours per month on billing tasks at $25 per hour:

• $200 per month
  
• $2,400 per year
  
• $12,000 over five years
  

That does not include lost recovery from mistakes.

Modern billing platforms eliminate these gaps. You can automate allocations, review statements before they go out, and reduce the back-and-forth that drains your team’s energy.

4. Not Using Visibility to Drive Resident Accountability

When residents do not see what they use, behavior does not change. Bundled utilities often lead to higher consumption because there is no connection between usage and cost.

But when residents receive itemized statements or even educational statements that show what they would have owed, something shifts. Usage becomes visible. Waste decreases. Fairness improves.

This is not about penalizing residents. It is about transparency.

And transparency supports both:

• Lower overall property utility costs

• A stronger sustainability story for modern renters

Even small reductions in property-wide consumption can materially impact annual expenses.

Visibility drives accountability. Accountability protects NOI.

5. Assuming It Is “Too Late” or “Too Small” to Fix

Many independent owners and mid-sized portfolios believe:

• “We’re too small for this to matter.”
  
• “Residents will push back.”
  
• “It sounds complicated.”
  
• “Other providers lock you into long contracts.”
  

So they do nothing.

Meanwhile, costs rise every year.

The truth is, utility billing solutions today are more flexible than ever. Portfolios of any size can implement cost recovery. Some owners prefer a supported approach. Others want full control with a DIY platform.

The important thing is not how you implement.

It is whether you start.

What Non-Billing Really Costs Over 5 Years

Let’s combine conservative numbers for a 100-unit property:

• $75 per unit per month in unrecovered utilities
  
• $20 per unit per month in under-recovery or leakage
  
• $2,400 per year in staff time
  
  

Five-year impact:

• $450,000 in unrecovered utilities
  
• $120,000 in under-recovery
  
• $12,000 in admin time
  

Total: $582,000 over five years.

At a 6 percent cap rate, that could represent nearly:

$1.7 million in property value.

This is why utility billing is not a back-office detail.

It directly affects long-term asset performance.

Practical First Steps to Start Recovering Costs

You do not need to overhaul everything tomorrow.

Start here.

1. Audit Your Current Utility Expenses

Pull 12 months of:

• Water
  
• Sewer
  
• Trash
  
• Gas (if applicable)
  

Calculate:

• Total annual spend
  
• Average per unit per month cost
  

This gives you a clear baseline.

2. Review Your Lease Language

Confirm what is currently billable and how utilities are structured.

If changes are needed, plan to implement them at renewal cycles rather than mid-lease.

Keep communication clear and resident-focused.

3. Model Recovery Scenarios

Ask:

• What would 70 percent recovery look like?
  
• What would 90 percent recovery look like?
  
• How would this impact annual NOI?
  

Even partial recovery can significantly shift margins.

4. Choose the Right Billing Structure

Options may include:

• RUBS allocations
  
• Submetering (if infrastructure supports it)
  
• Hybrid models
  

The right approach balances fairness, simplicity, and operational ease.

5. Simplify the Process with Automation

Look for a platform that allows you to:

• Automate allocations
  
• Review billing before it goes out
  
• Give residents visibility into usage
  
• Avoid long-term commitments
  
• Scale with your portfolio
  

The goal is not more work.

It is less manual effort and more predictable recovery.

The Bigger Picture: From Expense to Asset Strategy

You work hard to optimize rent, reduce vacancies, and control maintenance costs.

Utilities deserve the same attention.

When structured correctly, utility billing:

• Boosts NOI
  
• Adds measurable property value
  
• Encourages resident accountability
  
• Supports sustainability goals
  
• Reduces administrative strain
  

You are not just recovering costs.

You are strengthening the financial foundation of your property.

If you suspect you might be leaving money on the table, you probably are.

The good news? It is fixable.

See how utility billing can boost NOI. What to see how simple it can be?

👉 Schedule a Discovery Call