BILLING BACK UTILITIES CAN DRAMATICALLY INCREASE YOUR PROFITS
by Corey Donaldson 

When a mobile home park owner is billing back utilities, the result is a significant increase in profit. As a park owner if you are absorbing the costs of water, gas, sewer, and trash, these expenses subtract a good bit from your bottom line. The best method to increase your bottom line and by maximizing profitability is to minimize or eliminate the expenses of utilities used by the residents. The solution lies in billing the utilities back to the residents.

Water is probably one of the biggest expenses to a mobile home park owner. I have discovered that when I bill the water back to the residents, water consumption is reduced by about 40%! When the residents are not paying for water, they are very carefree about their consumption of it - their lawns are extremely green, they wash their cars, and they freely use water without considering its cost. When they are responsible for the bill, however, they monitor their water consumption very closely.

You will need to install a water meter to monitor the individual usage of the resident. Water meters are about $35 per meter. I would also install a shut off valve at the same time either before or after the inline water meter. This will allow you to turn off the water for an individual home instead of the entire mobile home park (for repairs, etc.) Monitoring the total water usage for residents and comparing this to the mobile home park overall consumption will allow you to determine if there are any water leaks in the park as well.

Another utility that you can bill back to the residents is gas. Some of the newer parks are all electric, but many of the older parks have homes that use gas. This definitely is an expense that you can cut by billing it back to the residents. Some park owners have required the resident to change the heating to propane and have an individual propane tank. I have found that in some of my mobile home parks that the gas lines are old and must be checked frequently for any leakage. One way to do this is to again compare the total gas consumption for the residents and compare this with overall consumption for the park.

In addition, you can bill back sewer and even the trash. By billing back the trash, this saves you the expense of the big trash bins that run anywhere from $200 to $500 per month. You can bill back the individual residents so they will have the personal trash receptacles that are provided by the city or the county (usually a charge between $8 and $10 a month).

When you bill back the water, gas, sewer, and trash to the individual residents, you can net between $25 and $60 a month, another way to increase your profitability.

There are two ways to handle the billing back process:

• Bill back the utilities yourself
• Use a bill back company

I currently use a bill back company at my mobile home parks because they:

Provide a monthly detailed reporting log for my onsite managers and ensure that the billing process is accurate and timely

Research all of the state regulations and ensure that we are constantly in compliance

Have available legal resources if there is an issue with a resident

Acts as a neutral 3rd party that monitors the billback program

Produces an additional revenue stream by charging a "base charge" that as an owner increases my profit

By using a bill back company you are also able to realize another profit center. For example, the bill back company will charge your resident a base fee of $4.50 to $7.50 (which would be paid to you). And then, depending upon what level of service you want from the bill back company that you are using, you will pay them between $1.00 - $4.00 per month/per resident.

If you want them to read the meters and do all the billing/collections, your expense will be closer to $4.00/month. On the other hand, if you have your manager read each meter and complete the monthly log provided by the bill back company, your cost will be about $1.00 per month/per tenant.

So, as an owner you will realize the spread between what you're charging the resident (the base fee of $4.50 to $7.50), and what you're actually paying the bill back company to bill back the utilities to residents ($1.00 to $4.00).

By billing back residents for utilities will result in about 8% -10% savings in park expenses and will impact your bottom line and monthly profit!