Utility Billing as NOI Strategy: How Property Managers Are Turning Expense Management Into Revenue Growth

Written by:

Steve Marcinuk

Date:

17 Jul 2025

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The multifamily industry faces mounting pressures from rising interest rates, insurance costs, and regulatory constraints that limit traditional revenue optimization strategies. In markets like California, where rent control measures and tenant protection laws continue to expand, property owners are increasingly focused on controlling what they can: operating expenses. This shift has created significant opportunities for solutions that help owners recapture utility costs while improving their net operating income.

Tiffany Mittal, Founder and CEO of Utility Ranger, has built her company around this challenge. As both a technology provider and active real estate investor, Mittal has developed what she calls a “value-add strategy without putting a bunch of capital into projects.”

“We purposely only look to acquire properties that aren’t billing for utilities so we can quickly implement tenant utility billing and start to increase our NOI, raise the property value, pull out the additional capital and use that capital to grow our portfolio,” Mittal explains.

The Business Case for Utility Billing

The financial impact of utility billing extends far beyond simple cost recovery. Commercial properties are valued based on net operating income divided by capitalization rates, making NOI improvements directly translate to property value increases.

“Utilities are your third largest expense,” Mittal notes. “If you can take utilities and actually get reimbursed for all that expense back from your tenants, that’s a direct impact to your NOI. When your NOI goes up, it’s that multiplication that triggers your property value to go up.”

Mittal shares a concrete example from her own portfolio: “I had a property that was 36 units. We started billing our tenants for utilities. We got about $36,000 of additional revenue that following year. But it wasn’t until we went to go refinance that property that our property got valued at a million dollars more, just for that $36,000 of additional utility income.”

This forced appreciation strategy has become what Mittal calls “BRRRR 2.0,” instead of the traditional buy, rehab, rent, refinance, repeat model, she advocates for “buy, reduce expenses through RUBS, rent, refinance, repeat.”

Serving the Underserved Market

Utility Ranger specifically targets property owners and managers with smaller portfolios; typically under 1,000 units; who have historically been underserved by traditional billing service providers. This segment includes everyone from duplex owners to mid-sized property management companies seeking to bring utility billing in-house.

“Our property management companies under 1,000 units and owner operators under 1,000 units are traditionally underserved today,” Mittal explains. “Whether it’s somebody with a duplex who’s just excited to have a platform to use and accept payment through, or larger operators looking for better service.”

The company has recently expanded its appeal to property management companies by introducing an approval workflow feature. This lets property managers offer utility billing as an additional service while maintaining oversight and control.

“Property managers are already operating on very slim margins,” Mittal observes. “If you can add this as another service that you can bring in-house, you can actually generate additional revenue for it, which is a great revenue stream, not only for property managers, but allows them to make money while keeping the service in-house.”

Technology Enabling In-House Solutions

The new approval workflow represents a shift in how property management companies can approach utility billing. Previously, many smaller management companies relied on flat fees or struggled to access third-party billing services.

“Rather than maybe going off to a third party service, we’ve just now implemented a new feature within our platform that’s perfect for property management companies themselves,” Mittal explains. “If you’re a property manager and you want to have the on-site managers or maybe the owners approve the billing before it goes out, we have a new approval workflow.”

The system allows billing approvals to be sent to owners via email, providing access to a secure link where they can review all information, make changes, provide feedback, and approve billing, with communications flowing back to the billing administrator.

This technological approach addresses a key pain point: reducing dependence on third-party vendors while maintaining service quality and oversight.

Market Pressures Driving Adoption

Current market conditions are accelerating interest in utility billing solutions. Rising utility costs, particularly in markets like California, are forcing property owners to explore every option for expense management.

“I feel really bad for the multifamily owners in California. The utility costs are rising astronomically, and owners have no other way to try to combat that increase, except for to bill it back out to their tenants,” Mittal says.

The regulatory environment compounds these challenges. “If you’re an owner and you have regulatory issues coming down the pike saying you have rent control, you can’t raise rents, you have to give back 100% of the security deposit, you have all these expenses that are really uncontrollable. Your only solution is to control the things that you can.”

Some operators now explore unbundling strategies. Mittal describes a Class A property client in Los Angeles who is “pulling their property taxes out and billing for LA County Vector Pest Control, Mosquito Abatement, Metropolitan Water District Charges, Stormwater Charges, anything that they can find within their property taxes that can be billed, they’re pulling out and billing as well.”

The NOI Impact Explained

For property owners unfamiliar with the mechanics, Mittal breaks down the direct connection between utility billing and property valuation: “Commercial properties are valued at your NOI, your net operating income, divided by your cap rate or capitalization rate. NOI includes everything deducted from your property operations, excluding your debt – maintenance, turnovers, salaries, utilities, all of that.”

The leverage effect is significant. “Every dollar that you can bill back, you get another $250 back in value appreciation on your property,” she notes. “If your utilities are $5,000 and you’re billing out $4,900 of it, you have another $4,900 in your pocket that you didn’t have last month.”

Future Technology Integration

Looking ahead, Utility Ranger is developing AI integration to help operators become more efficient and responsive. “We have a big AI component that’s going to be released later this year into our platform to help our operators leverage AI to help them become even better at what they’re doing within our platform and be more responsive to their own tenants.”

The AI system will help operators respond to tenant questions about utility billing, providing suggested responses that maintain consistency and professionalism.

Industry Implications

The rise of utility billing solutions reflects broader trends in property management toward vertical integration and technology adoption. As Mittal observes, “You’re seeing a lot more management companies really vertically integrating a lot of their services, because the third party companies are really like the wrench in their system. You can’t control what the third party companies are doing, but if you bring all that control in-house, you can actually perform a lot better for your owners.”

For property owners and managers facing margin pressure, utility billing represents one of the few available strategies for improving NOI without significant capital investment. As regulatory constraints continue to limit traditional revenue optimization, solutions that help recapture operating expenses are likely to see continued adoption across the multifamily sector.

The key insight from Mittal’s approach is viewing utility billing not just as cost recovery, but as a strategic tool for forced appreciation and portfolio growth. In an environment where traditional value-add strategies may be capital-intensive or regulatory-constrained, expense management solutions offer a path to improved returns and enhanced property values.