Kahuna Mastermind, Investor Fuel Mastermind, Cash Flow Mastermind with Utility Ranger, RUBS

I'll just tell you, I am super excited about the next— this next section, right? Um, we're just having a conversation, uh, just privately over here, just utilities, right? So, uh, on your properties, you— if you're doing it right, you should almost always have some type of RUBS program on all your properties. Like, it's the easiest money that you'll ever get. But our next presenter is going to show you how to get all of it because the challenge most of us when we're setting it up, and I'm a victim of this, is for us on our bigger properties we've used companies called Conservus and things like that. And it's never— the service has never worked out well. And then really though there's also another set of units like in your smaller, 100 units to, you know, 50 units, 25 units. In that aspect, it's not economical to use the bigger parties. They're just, they're not very good at it. They're going to overcharge. And so I'm, uh, I'm going to bring in Tiffany— I want to say Mittal, right? I always want to say Mittal, but I know that's not right. Uh, with Power Ranger. She came on my podcast. Um, we had a really good discussion. It was, it was powerful enough. It was like, you know what, we need to bring you here here live and tell us about what you're doing because— and I really need you to pay attention because I think she'll be able to show you some additional savings and value in what you should be doing and what she does and what her company does. So it's a great story. So Tiffany, welcome to the show.

Thank you so much. Well, first off, you know, I'll tell you a little bit about me. Just making sure I have this. So my husband, actually he's right here.

Hi.

We're apartment owners first and foremost. So we really did this because we needed it for us, right? No one would help us. So it really kind of started one day. I was sitting around our kitchen table doing our finances and looked at my husband and said, what is going on with the water bill? These water rates have gone up so much that it's starting to eat into our profits. And I'm sure all of you have experienced this because water rates have gone through the roof over the last 10 years. And not even water rates alone, it's sewer rates, it's trash rates, it's pest control rates. So what really kind of set us off, I'll explain in a minute. Is something that happened at our property when we had a resident complain. But before I go there, I want to kind of understand just the mentality of our residents. So think about it. You know, today's a conference. This morning I was thinking, oh, my shirt's a little wrinkly. I want to iron it, but I don't like to iron. So I'm going to stick it in the shower. On a hanger. I'm going to turn on the hot water and I'm going to shut that bathroom door and I'm not going to think about it until I can remember that I still have the shower going, right? Because I'm going to just take the wrinkles out of my shirt. We've all done it, but we do it because it comes with the price of the hotel, right? But our tenants think the exact same way. So it was really when We had this tenant complain, and we knew we had to do something. She called us up and said, you know, I think my neighbor leaves her water on all day. I said, there's no way. So we sent our onsite manager in there. What do you know? Her shower's on. She's at work. We turn off the water. We wait for her to get home from work, and she said, well, my dog has anxiety, and if I leave the shower on all day, she thinks I'm home and doesn't bark.

Up here.

We knew we had to do something, no matter how much we begged our tenants to conserve. It just wasn't their priority. It's that same concept. It comes with the price of the rent. You know, we have, uh, people who are just like us. They said, well, maybe I'll bill a flat fee to my residents, $35 for a 1-bedroom, $55 for a 2-bedroom. Looking at Corey, 'cause he wants to bill a flat fee. I said, once you bill a flat fee, it's that same concept, right? Well, this comes with the cost of my rent. So if I'm gonna pay my utilities, I'm gonna pay for the water, and I'm gonna be charged $45 or whatever it is, no matter what I use, I'm gonna be as comfortable as I damn well please, right? I'm gonna crank my AC to 67. I'm gonna have my hot water go as long as I— As long as I want. Want to. I'm going to take as long of a shower as I want to because it comes with the cost of my rent, right? So you don't get any kind of behavior modification. So flat fees, same concept as a hotel room. So if you own smaller amount of units, so my husband and I, you know, we have 100 units in San Diego. We're from San Diego. We recently just moved out to Florida, much more landlord-friendly state. as well as many other people who have left California recently. You know, small owners like us, the reason we did this is because nobody would help us. You know, we had 100 units in San Diego. We tried getting our, you know, utility billing companies to help us, and they said you are too small, right? So small owners are already at a disadvantage. You know, utility rates have gone up over 75% over the last 10 years. Again, rent raises. California is not the only state that is experiencing that you can't raise rents over 10%. Well, when my bill has gone up 20%, where does that leave the last 10%? It leaves the last 10% I'm footing the bill for, right? So the big owners, they go to these utility billing service companies all day long and they do rubs. Sometimes they do submetering. No problem. If you go to them, they may take you, But they're going to charge you a lot. They're going to insist that they handle the collections for you. Then they're going to nickel and dime your residents with open fees and close fees and late fees. I know, because I've been there. I'll explain in a little bit. But most of the time they'll say, unless you have 1,000 units in your portfolio, we can't service you. Because they actually have people sitting in chairs doing the billing, and it doesn't matter The process is the same whether you have 100 units or whether you have 10,000 units. They're doing the same process, so it doesn't make sense for them to do it for small owners. You know, these utility billing service companies, they're in it to make fees, right? They're not owners. You know, they're in it to make fees. You know, I worked at a number of these utility billing companies, and We made 30% of our revenue on late fees. And so who does that really benefit? It's a little bit of a perverse incentive. So after going to all the big players and them turning us away, my husband looks at me and said, you know, you've been in operations for a little bit, and I know that you don't like it. You know, operations is hard, right? We have maintenance crews. We have bed bug issues. It's not really where I saw myself. And so I said, I'm a little bit more of a problem solver by nature. And so my husband Mark said, well, why don't you go get a job at one of these utility billing service companies and find out what they're doing and bring it back? I said, that's a good idea. So I got a job. This is actually the first company I got a job with. Like my husband said, they let us become customers by default. I helped grow that company from $100,000 to $20 million in 5 years and learned the secret about utility billing that nobody really talks about, because billing companies, it's about fees, and they don't really understand the owner's perspective. So, I'm Tiffany Mittal, CEO and founder of Utility Ranger, and I believe that the easiest way to add value to your properties is through utility billing. And that's because with the secret that I learned about utility billing, that it's not about the billing whatsoever. It's actually about forced appreciation. So, forced appreciation is kind of an NOI hacking rule. Every dollar you get in your additional NOI divided by your cap rate is the amount of value that you create in your property. So, what I noticed when we took on our first property, 36 units in San Diego, that first year we got $36,000 of additional utility reimbursement income, right? So our utility bills were about $38,000, $40,000, so we got about $36,000 back, right? That $36,000 was directly to the NOI because utilities are your 3rd largest expense, right? So that $36,000 on the income side When we went to go get that property refinanced, Fannie Mae valued our property at a million dollars more just for that thirty-six thousand dollars of additional revenue. They gave us a cash-out refinance of five hundred thousand dollars that we were able to take that money and buy another property. And that's when it really rang the bell for us. And we said, "Oh my God! This is really about forced appreciation." So you look at all the people doing utility billing, and they're not helping the little guy. Well, how come all the big guys get the advantage? For years they're using this to force the appreciation of their properties, but no one would service us. And so once we really saw this, we took this and went across our portfolio on our 100 units. We were able to create $2.5 million of additional value that we were able to take out about $1 million total and buy new properties and really grow our portfolio. So we saw this as a mechanism to grow our portfolio. So, I call this my RUBS to Riches framework. So, we're going to go over how you can use RUBS as a mechanism to grow your portfolios. The first piece of this is split. What can tenants pay for? So, you look at things that are occupant-dependent expenses, right? Water, sewer, pest control. Garbage. Look at things that maybe you don't typically consider. Wi-Fi, amenities. What amenities are you using? You're seeing this already in Class A space, amenity charges. That helps pay for kind of common area, gyms. Depends on how large your properties are, but it's starting to trickle down. Electric car charging, tenant insurance. All these things are little People ask, how do you implement this? Well, really, all it requires is the proper lease language. Either you make sure— the number one thing you should do after you leave here today is make sure that your leases state on any new resident moving in that tenants are responsible for all utilities. Typically, you'll see, and I've seen this a million times, that tenants are responsible for utilities up to a certain amount. Tenants are responsible for all utilities except water, sewer, trash. So you take out the water, sewer, trash exemption, and residents are responsible for all utilities. Simple. Now, let's say you have, you know, leases already in place, really common. You basically do an intro letter across the property saying, we're going to be implementing a new conservation effort. It's a very conservation-heavy message on the intro letter. And you do a 30-day notice. You blanket the whole property. You say, 30 days from today, if you're on month-to-month leases, or the day after your lease expires, whichever comes later. This is going to be the new change of terms of tenancy. So that way, you don't have to go and keep track of every tenant and their lease expiration and make sure you give them the notice in advance. You just blanket the whole property. Some people will get 30-day notice. Some people might get 6 months' notice. No big deal. Now, I was telling this to Corey earlier that if you think about it, this is the same concept about a hotel. Tenants naturally use less of what they're paying for, right? So we just had a client of mine who was doing a flat fee on her property, a flat fee of $50 a month. And when she said, you know, we're doing $50 a month on water, but our water bills are so much. So when we put her Within the system, her water bill was actually $200 a unit, but the tenants were using so much water and she was only getting $50. So we switched her to a RUBS methodology, and she couldn't do it all at once, right? So everyone's kind of rolling off this flat fee and moving into a RUBS, which is better than not doing any collection, but moving into a RUBS calculation. Month 1, her bill dropped by 25%.

Wow.

Because think about, it's that same concept. It comes with the price of your rent, or it comes with the price of your hotel room, right? It's just that slight modification of behavior that when you're paying for something, you're more aware of it. Why this matters. So I remember when my husband, you know, we said, okay, we're going to implement this. I'd already been working at the Rub's company. And he said, well, like most owners, are you sure? I don't— I can't handle a flurry of move-outs right now. We have to keep our occupancy levels high to be in compliance with our loan terms. Like, what are we going to do if we have a bunch of people move out? I said, I've been doing this already. We're not going to have a bunch of people move out. But, you know, like most owners, he was a little bit nervous. So I— we, you know, we implemented it first month. We had, what was it, Mark? 12 maintenance requests for runny toilets, leaky faucets.

Wow.

That the residents had had for months and not telling us because they were hiding a cat, hiding extra occupants, or didn't want you in their unit because they were a hoarder. Whatever the reason is, they don't want you in their unit, so they're not telling you that the toilet's running at night. They're not telling you that the faucet's leaking. Well, we all know if the faucet's leaking, you're going to have secondary damage caused by this that their deposit is probably not going to pay for at the end of this. So it creates more tenant responsibility, because now that they see this bill fluctuate every month, they start telling you, oh, whoa, I have a runny toilet. I mean, think about how cheap replacing a flapper is on a toilet compared to how much water you're use— losing daily by them not reporting it. And this could go by for months. You drop tons of water with an issue with a flapper for, you know, a $2 part. So, implementing this really does create not only tenant responsibility, but that slight modification of behavior, right?

Right.

So, I'm using less. I'm not doing my dishwasher with one dish in it. I'm not doing my laundry with one article of clothing in it. So, now I'm compressing what I'm using. So, I'm using appliances less, which is also going to help me in kind of the longevity of my appliances. I'm reporting issues that come up, so I'm getting those handled, so I'm not having secondary damage, and people are using less water overall. So, it's really a win-win-win, although it is scary to implement upfront. So, the next piece of this is surge. So, once you implement it and you see all these things transforming on your property, Tenant responsibility, decrease of usage, what you really start seeing is the surge of property values. And I'll go over what this calculation looks like so everyone can see, okay, what are we paying today in utilities? What does this look like if we were to implement it? What would that forced appreciation value look like? But again, it's— you have to also remember, you know, how properties are valued, right? So— Commercial properties are valued with your NOI divided by your cap rate. So everyone here knows on average what their cap rates are. So we'll take that number and we'll do this, you know, kind of back of the envelope. The next piece of this is scale. This is kind of what I talked to you about before, which is kind of refinance and repeat, right? People have all heard of the BRRRR strategy. I feel like they need like an NOI hacking piece in that. You know? So, you're buying, you're rehabbing, you're refinancing. You know, same thing. But what you're doing in there is think about how much your NOI hacking if you're doing big rehab projects. How much capital are you putting out to increase your NOI, to increase that rental amount? It's a lot of capital. And maybe you don't have that capital upfront when you first buy a property. So, this is like a value-add strategy which doesn't cost you any money, right? All you're doing is switching the utilities responsibility from landlord-paid to tenant-paid and increasing your NOI just by the amount of your utility amounts. So, using that amount increases the value of your property. You surge, you repeat, refinance, you pull your cash out, you do it again. So, this is how my husband, Mark, and I have basically grown our portfolio. And so that's why I'm teaching others to do what we've done and it's worked. It's really no money out of pocket. So this is that same property that I was talking to you about in San Diego, our 36-unit property. So total income, $4,500 cap. This is a few years ago in California prices. But $7,100 was the value of the property. You see that we increased the total income by $35,000. That also decreased the expense a little bit too because we had that increase in savings from the residents. So the total NOI increase was $43,000. So the property value difference, $953,000. No money out of pocket, just changing the tenant responsibility. And this is 36 units. It's crazy. So we're going to do a quick exercise. I'm going to give you a quick back-of-the-envelope calculation. So everyone get their phones out, and if you have this— now this is a back-of-the-envelope. We use this when we're evaluating new deals, and then I'll show you how to do the deep dive calculation. But you're going to take the number of units you have, you're going to times that by 1,000. So 1,000 is basically how much money you're going to get annually per unit on average in utility reimbursement. So that's about $80 a month per unit. per unit. So, $1,000 a year. So, number of units times $1,000, take that total and divide it by your cap rate. What numbers do we have?

$1.173 million.

$1.173 million.

Pretty good.

How much? $21 million. 21 million. Now that is amazing. That's— are you doing rubs today?

Combination.

Okay.

Do some utility packages.

Okay.

Okay.

Mm-hmm. Mm-hmm.

Yep.

Well, that's— I mean, the concierge package that includes utilities. The ones that don't get— do they have an option to buy the concierge package? Which is utilities.

Uh-huh.

That's actually interesting. I haven't heard that before. Now, on the utilities, are you doing flat rate on that, or are you doing it based on what your bills are? Okay. Yeah. Yep. In the rears. Yeah. Yes, traditionally it's that way, especially with the service companies. You have to wait 3 to 6 months to get reimbursed typically, which is definitely frustrating. Yeah, but $21 million, that's a pretty great number. Any other numbers anybody wants to share? $57 million. $1,000 is a per-unit return, so about $80 a unit per month in utility reimbursement. Yeah, I mean, this is average, but I'll show you the deep dive calculation on this. But it's we're talking a lot of money. Do you? I mean, this is why this is why we were like, why aren't anybody helping these people like me?

Yeah. I pull out, sitting, I get them to come out. Dude, we gotta stop the firing. Then we need to figure out if there's any way— let's stop this building, see if we can, you know, is there anything going on in this building here? Is there anything else happening? You should have no water leaking.

You know what it is? I have— my husband and I had some student housing. We've sold our student housing. You know what it is? It's leaky toilets, and they don't want you in their unit to see their grow factory in their closet. They don't want you to see the marijuana plants they're growing in their closet, and so they won't let you in their unit to change the $5 part. I mean— They don't want you in the unit and those flappers on the toilet. So you have to have quarterly inspections that, uh, that will help. But I guarantee you, there's a lot of flappers that are leaking. Mm-hmm. Mark has an opinion on the platter. Yeah, I mean, the thing is with rubs, nobody wants to be the first one in your neighborhood to do it, and nobody wants to be the last. And you do it with a conservation-heavy message. Like, we're all— and especially the kids in school today— hey, we're all doing our part to conserve. You know, we're gonna hope to get this conserv— I mean, it's really a conservation message that resonates with tenants.

Yeah.

I mean, it does work in Florida, though. We just, we just bought 30 units in Pompano Beach. Yeah. So this is, this is the short calculation. So, yeah, correct, correct. Yeah, it's the delta. If you're doing something already, it's the delta between what you're doing and what your bill is.

Yeah.

So, doing it from a flat fee to RUBS is easier to do than doing it from nothing to RUBS, because they're already used to paying utilities, right? So you don't have to notify your residents in the same capacity that— it's just, hey, we're changing the billing methodology. Versus we're changing the utility responsibility, right? So the utility responsibility, you have to wait for the leases to expire. So you're going to still blanket notice the property, but it's going to be a roll-on effect over the next 12 months, right? So on a flat fee, you're still going to be collecting the flat fee along the way, but as those leases expire, since you've notified them of the bill methodology, and it depends on your lease, if your lease says— And many leases do, this is the way we're going to be billing. It's going to be, you know, one of these 3 different, you know, methods, or a combination of both, and we have the ability to change our methodology as we see fit. There's a lot of lease language that basically says, I can change my methodology at any point without having to notify you, which then would be a simple change.

Right.

It just depends on what your lease language says. So, really, Understanding your lease language, putting that information up front for all new leases going forward. And I'll show you, I have a copy of lease language I can give everyone here as well, just as a sample. So water companies, unlike electric— so electric companies, they'll go all the way to the individual meter, right? The distribution of electric is easy. The distribution of water is never going to be the same.

Mmhmm.

So, back in the '70s, the big regulation came down and said, okay, all apartments built after 1972, or whatever it was, have to be submetered for electric directly with the power company. The water companies never did that, because can you imagine, every building's plumbed differently, right? So, can you imagine the water company coming into your tenant's unit to, to read a water bill, or read a water meter? It's, it's not going to happen. They're not going to chase down any individual. So they basically say, we're going to come to the street. If you want to submeter after that, we're only going to bill the property owner at the property level. So unless you install a submetering system on the property level is the only way to get the individual consumption. But not all buildings can do that, right? Sometimes you have commingled plumbing. You have shared hot water heaters. You have stacked risers in certain buildings where you have commingled plumbing. So it's not always easy to submeter. It's also really expensive. It's somewhere between, you know, $200 to $500 a unit. You have meters, you have meter reading equipment, you have repeaters around the property, you have meter reading failures, you have— the regulations around submetering is complicated. In that case, you'd want to go to a utility billing company, service company who knows how to do it. Because you wouldn't want to do that yourself. It's the compliance side of that, it's a nightmare. But when you look at what you get from an owner in return, right, so whether I'm submetering the units or whether I'm actually just doing my mathematical formula to figure out what everyone's usage is, my return is kind of negligible between the two. So why put all the capital on the properties if what I'm getting back could be done really for free, and what I'm going to get back is about the same? So ideally, if we could all submeter, that'd be great, but it's not always feasible, and it's just really capital intensive. So then we're just dividing it by units, like each building? Square footage, occupancy, because you can't divide it equally, right?

Yep.

Because you have a little old lady in one unit, and you have the family of 5 in the other unit.

Yes.

Right? And you can't really say that 5 people should be 5 times Right. More than the single lady, right? So there's economies of scale that's built into any kind of ratio utility billing program. They say, you know, 1 equals 1, 2 equals 1.6, so you get like a 0.4 of a person savings, you know, 3 equals 2.4, and then it goes down to 0.4 of a person after 3 people. So you have this kind of economies of scale because you have, you know, shared usage like dishwashers There's laundry. So you have shared usage even though you have more people in the unit. So, and you take that total of your ratio occupancy total, which is your kind of scaled usage compared to the property's usage, and your square footage total compared to the property's total. So it's not just so kind of simple as dividing it by units because it's more complicated than that. Yeah. Okay. So it's like you have to figure out what's the most fair way when you can't actually capture the actual usage. Okay. That's helpful. Thanks.

Yeah.

I will get to that. So, so when we're evaluating new deals, so this is what my husband and I, we like take this as our kind of acquisition strategy. Like when we're evaluating new deals, You look to it and say, okay, what are you really looking for? So, and I know we all evaluate deals all day long, so I want to make sure I gave you guys a little bit of tools to kind of take back. So when you're looking at your next deal, you know how to look at it to say, okay, well, what what does this really come back as return for me? So this is an example of a property in El Cajon. They're selling this at like a 2.63 percent cap, which I don't know who. sells at a 2.63% cap anymore. So this looks like a bad deal initially, right? But then you look on here. So the things I'm looking for on expenses, this is water and trash, $40,000. This says gardener, pool, and trash— gardener, pool, and pest, I think it says, yeah, $10,000. And then this says sewer, $15,000. Those 3 things are not going to go up.

Right.

So those 3 combined are a lot of money. And then one thing that you're looking at on here, on income, you see the expenses down here? You're looking at other income, right? So where is the utility reimbursement money coming from? It doesn't look like today they are doing anything. So quick model, this is what I just went over with you. Quick model, 20 units times $1,000, $20,000. Divided by the cap rate, $760,000 in forced appreciation. Long model, to really understand it, take these line items. So, the $40,000, this says gardener, pest, and fire. So, I took $5,000 of that because fire is not that expensive and gardener. So, $5,000, $15,000 for sewer. So, I'm looking at $60,000 and I times that by 90%. So, I'm going to get 90% of this total money back. Right? So quick amount was $20,000. When I really look at their expenses, it's really like $54,000. $54,000 divided by that same cap rate, $2 million in forced appreciation versus the $760,000.

I know.

So it's— you want to do the short model, you know, just as you're thinking, hey, how many units, what can we get back? But if you have the financials available, Do the calculation, you know. It says, here's these totals on utilities. Actually take that money, take 90% of that money, and divide it by the cap rate. Here's another really good one. Are your rents at market rate? So everyone thinks, like, oh, I'm including utilities, and I'm at market rate rent. This is, I hear this all the time. Okay, well, if you're at market rate rent, and you're including utilities, You should probably be $80 more than your competitor if you're really at market rate with your utilities. But guess how many people are gonna come on your— knock on your door if you're $80 more than your competitor? Nobody. So things to look at is utility rates. On this one, this is actually our same property when we first implemented this. We had $1,320 as our average monthly utility bill. Market rate rent, our comps without utilities were $1,320. When we averaged our total utility amount, we just assumed our neighbors were similar to us, our effective rent was $1,238 and their effective rent was $1,402. So when you compare the two, you're not really at market rate if you're including utilities because many people are not. So really you're $165 per unit difference Than your competitors. You can't compete if you're that much lower than your competitors. So this is a great case study on a client who had 500 units. Nobody would help him. Call him Growth-Focused Gary. 500 units portfolio in Seattle. He was considering implementing rubs, but he was worried about his resident turnover. He had to maintain good relationships with the bank to keep his loan in compliance. He reviewed local utility billing companies but found high resident complaints and high fees. So he said, you know, most of them said they wouldn't even work with him because he only had 500 units. So he looked at his options. So his first kind of worst-case scenario was Well, what if all my residents move out? So scenario 1 says, okay, let's, let's go with this worst-case scenario. Let's say 3% of your residents move out and those units stay vacant for 6 months. The likelihood of that is pretty small, but let's go with it. So out of the 500 units he had, 3% was 15 units for 6 months at $1,320, $118,000 in lost rent. Compare that with his monthly rubs income on the properties times 6 months, $219,000 of income during that same time period. So his real net effect on revenue was still $100,000 positive, even if those units stayed vacant for 6 months. Scenario 2, how could this change his portfolio value? Same numbers, his portfolio value, $92 million. After the REBS implementation, $17 million increase in his portfolio value. And the only thing he did was change the utility responsibility. It's insane. No one would help him. Imagine being able to increase your portfolio value by $18 million and no one will help you do it. It's bananas. Another deal, actually, we were looking at this deal in Florida. $17 million. This was an 88-unit property. I pulled this one in here because I wanted to, again, look at what they're doing. Other income. They show other income on here, but they only show $30,000. And when I looked at their expenses, their water sewer bill alone was $133,000. Their trash bill was $6,000 and their pest was $5,500. So $145,000. And I see an other income category of $30,000, but I'm not really sure what that is. So, when I looked at the value-add opportunity, $145,000 times it by 90% came out to $131,000 divided by the 6.04 cap rate, $2 million of value that we could create just by buying the property and changing the utility responsibility. So, when we looked at, okay, how does this look, right? You're like $200 a door or whatever this is. We can create $2 million of additional value putting no money out of pocket. So these are the things that we look at whenever we're buying properties. We want to buy a property that doesn't have rubs currently implemented because we know we can come in and create value out of thin air with no money out of pocket. So like I said before, small owners are underserved because no one will help them. The service companies can't help them really unless they charge them exorbitant fees. But, you know, Mark and I, we were persistent. I said, you know what? I've worked for these service companies. I understand the value. I did this for 10 years through multiple service companies. I understood the value, and I saw the biggest gap in the market. And I said, no one will service anybody who has under 1,000 units. People like me who need the hand up as everyone else does. Right? If no one will service you, how do I take this service model and turn this into a software model? How do I take this from someone else helping me and giving me 3 months delays? By the time I get my water bill, let's say we're in January, right? The water bill that you're getting right now is for the month of December. By the time you get that bill and you give it to your service company, they're like, well, we already billed out for January, so we're going to hold this bill for next month. They're going to bill that bill out in February. collected in March, wait for collections in April, charge late fees, maybe give it back to you in May, and they're going to give you a fraction of what you gave them, because they're going to remove all your fees.

This is a real issue, Tiffany.

When I speak out for women's rights, I'm asked, what about the experience of your family?

In September.

Due in November. You're so far behind. Yeah, because it's so far behind. And when they go to move out, you're now 3 months behind in a utility bill, and you have to try to catch them up from the day they moved out. And you're like, here's a $300 utility bill. I'm going to remove it from the deposit. Well, you've already trashed your unit, have not enough money left in the deposit to take on this $300 bill, so you end up eating the cost. See it time and time again. So I said, how do you remove all that, right? You remove it by removing the middleman. You remove it by taking out the people causing the problem, because I'm already getting the utility bill. I just need to enter that number. into something and then immediately have that go to the tenants. So then I can collect it on the first of the next month. I just took this 6-month process and turned it into 15 days by taking out the middleman. So we came out with Utility Ranger because I was pissed off at all this situation and no one would solve it. And I said, you know what? I don't like this, and I know people just like me are having the same problem, so I'm gonna fix it. No one else will fix it, so why not me? And I'm a non-technical tech founder. So Utility Ranger is really a symbol of strength. It's the Space Ranger who's out there to help the little guy democratize this prop tech space so everyone has the same advantage the big guys have had for years. So a year in, we pitched our company to the 10X Incubator and they acquired half our company on the spot.

Wow.

So it has been a whirlwind since bringing in Grant Cardone and Jared Yellen. So I saw them as the perfect partner because their entire audience is my target market, little guys like me who no one will help. Until now. So people ask me, how does it work? This isn't even showing up for some reason. Wi-Fi, Wi-Fi. I don't know if the Wi-Fi is not working here. No, no, this is just an example image of the software. Wi-Fi is not working here. But basically, it's a software that allows property managers to do it themselves. Right? So we stick in the utility billing amounts, you click calculate, it shows you what the bills look like, and you click send. Sends them off to your tenants. I mean, it's really that simple. It does all the calculations, the square footage, it takes prorates the rent if you need to, final bills, it does all of it for you. And then, here we go. On top of it, think about, you're giving your business to a service company, right? Oh, here it is. You're giving your business to a—

Good job.

You're giving your business to a service company, right? Their motivation isn't your timeline. Their motivation is fees. So if you eliminate that, you're like, look, I can do it myself. I can send the bills off to my tenants. I can become my own utility billing company. And when you become your own utility billing company, guess what you get to do? You get to charge utility billing admin fees that these guys have been charging to your tenants. So our software is basically $3 per unit per month, right? No fees, no in-moving fees, no closeout fees, no late fees, nothing, right? Just a flat $3 per unit per month. But Now that you're the utility billing service company, you can either put that $3 on your resident bill, making it free for you, or you can say, hey, I'm going to charge $6 a month to my tenants, because that's going to help pay for the person who's putting in the bill amount, and now I'm going to turn it into a revenue generation tool. So now I'm going to make $3 a unit per month, or $4 a unit per month, and that's going to help me pay for other sunk costs. costs, like property management software that you normally eat the cost on. You can't have any way to recover property management software fees. So if you're making $3 or $4 a unit per month, you're covering all these sunk costs that you normally couldn't recover before. And because you're the one doing it, you can charge the admin fee. So not only does it become free for our users, but it becomes a revenue generation tool. So picture a day, one day when you open up your bill knowing that your residents are going to pay you back. Picture a day when your accountant comes to you and says, what are we doing different? Our profits are up. Picture a day when those extra profits catapult you to the next level. So I had mentioned this before. If you aren't doing it or you're doing some kind of utility billing program, we're offering A bonus for all the Cashflow members. So not only are we going to give everybody a lease package template with sample lease terms, sample introductory letters, sample 30-day notices you can use and customize as you want, but we're also going to give property compliance assessments. So there are compliance hotspots in the country. 99% of the country, you can do rubs all day long. In Texas, you can't charge more than a $3 fee. And you have to have a minimum of 20% common area accountability pulled from the bill. There's areas like San Jose and Santa Monica, it's illegal to do rubs in. Same with Miami-Dade County. There's a few hotspots like that that you can't do it in. So we can look at your properties and say, okay, what are the rules surrounding your properties specifically? So that way you know what they are. And most of the time it's not a problem and you just set that up within the software. If there's a limit on what you can charge for a fee, you just cap the fee at that. If there's a requirement on how much you pull out for common area, you just set that up within the software yourself. Then we're going to also do free concierge onboarding. So the system, it's, you know, software as a service. So typically, like any kind of CRM, you can set it up yourself. For all the Cashflow members, we're going to help you set it up. You can give us the information, we'll help everything get uploaded for you so you don't have to go through that process of getting it set up. It's fairly simple to do, but we can help you guys get that done for you. Wait a minute while people are scanning. I'm going to give you a copy of this deck too so you can put it within your—

Cool.

So you deserve to have the same opportunities the big guys have had for years. You deserve to have more money coming in than going out, and you deserve to build boldly and prosper. Any questions?

So I understand 98% of this. Here's the part I don't understand. Just help me, help me finish the gap. Most of our properties have one water meter. Okay, and you mentioned that it's really hard to individually meter, right? And so if you're trying to train your tenants that the more water you use, the more you're going to end up getting billed, how do you handle those in those situations? Because it's still just one water bill, right?

Mm-hmm.

And then you're using that 1.2% per person. Do you ever have tenants complain, say, I don't— my daily stuff doesn't change, why does my bill keep changing? Because I'm assuming you're dividing that out, right? So if you still have that one person running a shower all day, everyone's going to end up paying Correct. Okay. Do you ever have those, or those— is that not an issue?

Occasionally you do have clients or tenants who come and say, well, you know, I don't have an individual submeter. How is this getting divided? I need help understanding. And we typically say, well, we don't have a way to divide out everyone's individual usage because our building isn't set up to be able to have, you know, water that's designated only for your unit.

Yep.

So we tell them, we can't divide it evenly, right? We have to try to put, you know, the responsibility on the tenant, because the tenants are the ones consuming the water, and we can't divide it equally, because that's not fair.

Yep.

And we just are very transparent. That's not fair.

Okay.

So the only way to do it is to do it by the number of people who are in your unit and the size of your unit. The bigger your unit is, you typically have more bathrooms, more water.

Yep.

You know?

So you find that those conversations are enough to get people to reduce their usage?

Oh, it's not even so much the conversation helps reduce the use, it's seeing the bill every month. And when they see that fluctuation, they may not realize that their water habits are changing, right? They say, oh, I use the same amount of water every single time. But when you see that bill, you actually instinctively use less water, right? You're turning off the faucet when you're brushing your teeth. It's those little micro amounts that you're doing every single month, which will impact how the bill— and you're built— you're getting billed differently, right? Every month you have kind of seasonal rates that come into effect.

That's true.

And so if you're billing a flat fee, you can't really account for those seasonality, right? People take more showers in the summertime because it's hot and sweaty, right? So it's all that kind of seasonality. You do take out— we call it an owner's portion. In the industry, it's called common area deduction, right?

Yep.

So pool, landscaping. We call it an owner's portion because it's resident-facing, so that way they understand. So on the bill, in most service companies, they just give your residents a bill and it's like calculated in a black box and the residents have no idea how it's calculated. Then they go to the property manager and the property manager is like, well, let me go talk to the utility company. And so it's just kind of delayed. So we kind of eliminated all of those questions by just being very transparent on the bill. So the bill says, this is the master bill amount. So your— my sewer bill comes on my property taxes. So I get 1/12 of that will show up on each resident's bill. So it says, this is the master water bill, the master trash bill, the master sewer bill, whatever it is, right? And then it says, owner's portion is 20% of the water, 10% of the trash, whatever I have set that up to be. And then It says my tenant portion, or my kind of resident portion, it says my occupancy share of this bill is, you know, 1.25, and my square footage share of the bill is maybe 3.2. Those 2 in combination, you can reverse engineer it by multiplying that ratio by the master bill, and you can get the same number. So it kind of eliminates all the questions, because they see exactly how it's calculated on the bill itself. And so that typically eliminates any questions up front because you're showing them exactly how it's calculated. And it's better than dividing evenly because that's not really fair.

No.

Okay.

So if a single person moves out and a family of 4 moves in, everyone else benefits from it because— Yeah.

Okay.

Because now you're sharing the water, but the water bill may go up a little bit. You have 4 people, right?

Well, that's true.

Okay, good point. Yep, yep. It probably is pretty much the same. It will balance out, really.

Here's my biggest takeaway too. This is what— it's just making me think differently, right? So I've got on my student side, it's been traditionally that it's all bills paid, right? But it really does nothing to incentivize anything. And, and then costs have skyrocketed. So like you think about like commercial assets, right? Triple net leases. Those are beautiful because No matter what happens to your utilities or anything like that, you're just passing it right through and you're still going to make your profit. And the biggest erosion in our wealth lately has been things that— a lot of things we can't control, right? Is the inflation piece of utilities, water, insurance. Like, I wish you could pass the insurance cost to somebody.

Well, think about insurance. A lot of times you can bundle in renter insurance as well, and then you can up the renter's insurance and make additional income. So let's say your renter's insurance policy, when bulked in with your, you know, policy on the property, is an extra $5 to $6 per unit. You can charge them $15 per unit, right, which is typical, $15 to $20 per unit. So that helps pay for some of your insurance if it's bulked into the same policy.

It's only for your damages on your stuff, right? So it doesn't— it's not homeowners insurance, like, it's not a policy for for their stuff. It's just the— and this is what we do in our, you know, like, we'll try to buy it for $4, and we'll, we'll— the properties will charge $12 or, yeah, $12.95. We'll charge maybe $8, right? Or so I think we charge $7. So we bought it for $4, charge $7, we make $3 per, right? And then the property makes additional money too. So it's like, that's a piece. I think again, another— but like, when you add it towards 3,000 doors or whatever doors you have, you're like, oh, and then you put it on a cap rate.

Yeah. It's, think about how other industries have dealt with price compression, right? So we're having price compression, we have inflation, we have market economic factors. You have all this price compression, right? And then you have all these other things going up like utilities and everything. So how have other industries dealt with this? Look at the airline industry. What did they do? They unbundled their baggage, right? Because how are they going to continue to keep the prices low, right? You have to unbundle. Look at resorts. What have resorts done? They've unbundled their resort fee, which helps pay for a lot of these kind of sunk costs that they have to pay for regardless. So, and Mark is actually, I'll have to give him the credit for this. He's been saying this for years. The future of multifamily is triple netting apartments. You're paying for the airspace and everything else is extra. You have to unbundle to remain competitive because someone's only coming in— it used to be an amenities rush. What amenities are included with my rent? Everybody remembers the push to add gyms and all these different amenities, right? Because it was an amenity rush. Now those have really been commoditized and that compression on market rent. Now it's, what's the rent? Right? I'm only coming to your property if the rent is under $2,000. Now, I might have an amenity fee. I might have water, sewer. You have to buy cable. You have to buy Wi-Fi. You have to buy all these things. You can give out Wi-Fi codes for this, you know. You have to get Wi-Fi on the property anyways for your leasing office if you have one. So if I have to get Wi-Fi on the property, why not hand out Wi-Fi codes? And if it costs me, you know, $50 a month or $80 a month to go to the company to get Wi-Fi on my property or to get internet, then charge $40 or $30, slightly under that. It benefits them to go through you to get a Wi-Fi code and then you add Wi-Fi onto their list of charges. So unbundling is the only way to handle the market compression on prices so you can remain competitive, still get the traffic in your door. And then you say, okay, but you're responsible for all your utilities, and these are what they are. So you get the traffic, they have this kind of, this is what I'm paying for rent, but this unbundled kind of really helps protect your bottom line, and that's this concept of triple netting your apartments.

So are you seeing a difference between all the different classes of properties, of which ones it's more or less effective on? Switching, making that switchover?

I would say it's effective on all of them, but you're seeing it happen. Class A, everything kind of trickles down from Class A. So, this has been happening in Class A apartments since the late '80s, really. So, it's been trickling down. Really, in the 2000s, you saw the big push in Class B apartments, even into Class C, but larger portfolios, because the service companies have been out there for years and they have no other option but to go downmarket, right? But now you're talking people who have under 1,000 units, which makes up half of the multifamily supply in the US, are these mom-and-pop investors that no one will service. And this is really the heartbeat of America, are these mom-and-pop small businesses. And if no one will service them, you're totally, you know, you have this demand that no one will service. So that's kind of, we're hitting all the people who have 1,000 units and under and saying, you don't need service companies because you could do it yourself, and giving them a software tool to do it.

Awesome.

Any other questions?

I do have a question.

Yeah. I agree with you though.

I think—

I'm sorry.

Quick question.

Yeah.

So the software, you get to send the bills out. Does it integrate with QuickBooks or property management software so everything's kind of combined?

So we just launched in April of this year. So we're working on our integrations. Right now you can export your billing file and it has all the charges individually. So we use AppFolio. So what we do is we just export the billing charges each month. It comes out in a CSV. I just pull the columns that I need and I do a bulk import charge into my AppFolio. All property management softwares have bulk import charge features. So you just use the charge file and import it once a month right after you do the billing. So, but we are working on integrations. We're working on our AppFolio integration, our Buildium integration, and QuickBooks is a little bit trickier, but the bulk import charge file works for that as well.

Okay. And one quick observation. So I assume that you're just doing this where you need to do it. So something like electricity would still have direct—

Yes. Yes.

Right. And an observation in some antiquated markets with utility companies that haven't quite caught up with technology, If you have a continuous service agreement, sometimes they don't actually switch people over. And so I don't know if you monitor that, how you monitor that.

So we don't necessarily monitor that within our platform. A lot of people have this exact same problem. It's typically the best way to fix it is from an operational standpoint and saying, okay, you can't move in until you can show me from the utility company that you've switched it into your name on this date, and you use that as a prerequisite on their move-in date that they've already switched the utilities into their name. But it always slips through the cracks, right? You get the bill the next month, you're like, wait, they moved in on the 3rd, and this says the bill went through the 15th before it got switched into their name. So we actually made a feature within our software, because I've been doing this for a while, and I'm an operator, like, all these nuances that, you know, you think of like this have to have a solution. So, we made an other category within our software. So, when you get that bill amount, you can basically take that total bill amount and stick it into the other category and charge them on that first bill. We also have that other category for, like, you know, I've clogged my drain, I had to have the plumber come in, and I need to put that charge on the bill. So, that way, they get one consolidated invoice of their rent, any, you know, storage fee, pet fee, any charges that are within the lease that aren't being calculated, and then their utility charges that are being calculated, which are the master bills split up by the occupant's square feet or whichever, you know, billing methodology you want. We have a couple different options. And then the other category, if there's any, like, one-time charges that you need to add on there for, you know, not putting utilities in your name, or maybe I have to charge you some fee on top of not putting utilities in your name, I'm going to charge you a $25 penalty fee for doing that as well. I'm going to add that in on the other category.

Yeah, we have a $50 penalty fee. We do that all our leases. Like, if we ever have to put it in our name or whatever, like, let's say you don't— you're living there but you didn't pay your bill, and the billing company is going to automatically put it in my name. Once that happens, it's now $50 extra every month until you get it back.

Thanks. Yeah. Any other questions?

Right on.

All right.

Thank you. Thank you so much, guys.