- Speaker #0
And so ratio utility building is basically you're taking your utility expenses, mainly water, sewer, trash, the things that are master meter to the building and reallocating them back out to the tenants. So what happens is when properties are valued on a cap rate, it really helps kind of normalize when you value properties on a cap rate. It helps you normalize the investment, regardless of what type of investment it is. You know, it's like a different layer of, you know, owner investors and operators that don't kind of play in the traditional multifamily space. And so that's really kind of who we're going after and who has this niche has been really largely ignored by the prop tech companies.
- Speaker #1
We were in negotiations, investing in real estate. They're winning, they're making money.
- Speaker #2
What's up, everyone? Welcome to the Real Estate Educators Podcast, where we provide the education you can build on. I am your host, Kevin Amalsh. Once again, we're back. We're having so much fun with this podcast. We're helping real estate investors and real estate educators. So you're out there building a portfolio or you're fixing and flipping or you're out there providing content to other investors. This is the podcast for you. I have another great guest, something that we haven't had on the show yet, and I'm excited to learn more about it. So Tiffany Meidl, you've been in business for a little while, started out helping out your husband with the multifamily. It sounds like you have quite the multifamily portfolio between the two of you. And then you started a company, Utility Ranger, which is really targeting how to get your reimbursements back or maybe even shift some of your expenses to your tenants, probably adding some pretty significant value to your property. So excited to get into that. Welcome to the show.
- Speaker #0
Thank you so much for having me on.
- Speaker #2
All right. Now, it wasn't a lot in the bio you sent me about your background, so I didn't have a lot to go on there. So why don't we just start by telling us a little bit about yourself?
- Speaker #0
Yeah, no problem. So my name is Tiffany Mitchell and I've been in multifamily. I kind of fell into it when I married my husband in 2008. I went back to grad school right around the same time and started helping him with his apartments and learned pretty quickly that I didn't actually want to do apartment management. That was way too hard. So I kind of pivoted and went into prop tech and that way I kind of still be in the same industry, but more on the vendor side versus the owner side. So I've been in multifamily since 2008 when I went to PropTech, grew multiple utility billing startup companies and kind of found a niche in that area. And then in 2020, I started my own company, Utility Ranger. And we recently, in 2022, transitioned out to Florida from San Diego. So we've been transitioning all of our assets, doing 1031 exchanges out of San Diego into South Florida, which has definitely been a journey. And we've actually ended up using Utility Ranger as our secret sauce on our real estate investment. So we bought five buildings over the past year. We have one more remaining in San Diego that we're actively selling and going to reposition that one as well. Love multifamily. I think it was an industry that I was actually meant to be in.
- Speaker #2
Interesting. So I think you and your husband are very similar to my wife and I in that we have a bunch of residential properties and she hates them, Tiffany. She's like, we have to sell all of our residential. We have some commercial buildings also. And that is far, far easier to manage. There's some modified gross and some triple net stuff. So sounds to me like you're. almost going the net lease route in the multifamily space. So maybe since you're shaking your head, why don't you tell us like, what is a net lease and how is that being able to get those expenses to the tenant? Why that's so valuable?
- Speaker #0
And just to make sure we're talking about the same thing, you're talking about triple net and commercial.
- Speaker #2
Yeah. So that's where I went because you know, you're all the utilities, all the insurance, all the taxes, everything goes to the tenant, which is very different than residential. But what you're doing is taking a sliver of those expenses and doing that same exact thing. So it's not going to be a triple net necessarily. But I guess my question was, how is that? Give me like maybe an example of how that adds value to your buildings.
- Speaker #0
Yeah, but if we could work towards triple net in residence, that'd be great, wouldn't it? That would be pretty darn amazing. And so actually, that's exactly kind of where we're focused on trying to, you know, reduce the amount of expenses. So in residential, you have... all of these other expenses that you traditionally don't have your tenants pay for. And one of those is utilities, because utilities is like your third largest expense on the books. And so, you know, this has actually been around where you can take this utility, you know, expense and reallocate that expense actually back to the people who are using it, which are the tenants. This has been around institutional grade apartment buildings for years, you know, decades. But it was never really. done in the smaller multifamily segment, just really because there wasn't anyone to really do it for you. And it seemed really complicated. And so that's kind of where Utility Ranger came in. So I'll kind of give an example of how this really created a massive amount of equity on our own properties. We had implemented a utility billing. And for those of you who haven't done this or heard of this, another kind of term for this is also called ratio utility billing. or RUBS is the acronym that's used. And so ratio utility billing is basically you're taking your utility expenses, mainly water, sewer, trash, the things that are master meter to the building and reallocating them back out to the tenants. So we had done this for one of the first utility billing companies I went to go work for after I got out of grad school. And the only reason I went to go work for them is because I saw that we had a utility problem on our properties. Our water rates were going up. Our bills were going up. The tenants weren't doing anything to conserve. And I called every utility building service company out there and they all turned us away and said, I'm sorry, you're too small. Unless you have a thousand units in your portfolio, we're not going to service you. And so that was definitely like, I don't like to take no for an answer. So I went to go work for them thinking I would backdoor the system and they'd have to take me on by default. So when we implemented this on our first building, it was a 36 unit building in San Diego. That following year, we got about $36,000 of utility reimbursement money back from the tenants, which is about $1,000 a unit per year. But it wasn't until we went to go get the property refinanced, I think it was a Freddie Mac loan, they valued our property at a million dollars more just for that $36,000 of additional utility income. And that's when we were like, oh my gosh, this isn't about utilities. I mean, it is a sliver. It's really about forced appreciation. That's money back in your pocket each month, right? That's money that you wouldn't have had that you normally be eating the cost on. And that has a direct impact to your net operating income. So when we saw that million dollar valuation on just one of our properties, we instantly implemented this across our portfolio. It's a multi-million dollar increase across our portfolio. We were able to then cash out refi, use that money and buy another property. So this was money that wasn't there before, that now we can use this as a mechanism to grow our portfolio. kind of similar to this BRRRR strategy I mentioned to you earlier. You know, it's like buy, rehab, rent, refinance, and then repeat the process. We really kind of think of this as like a BRRRR 2.0. So you may not have a bunch of money to rehab your units after you buy them. So instead of rehab, you really flip that out and switch it with RUBS, right? You reduce your expenses using RUBS, and you can get that same uptick in overall asset value. Then refinance your property, repeat the process, pull the saved money out and do it again. So that's what we're doing here in Florida. We're only buying properties that aren't doing utility billing today. Instantly implementing a RUBS program, using that money to grow the portfolio value, pull the money out and buy it again. So we've already done that on one of our properties that we purchased here.
- Speaker #2
Okay. I definitely want to get into more of Utility Ranger and how that works. Sounds like it's mostly that, like you said, the master metered. So your water, your sewer and that, most of that stuff. But I also want to, I got a lot of questions for you. Let me start, let me start here. So for the listener, a lot of them are residential investors. We don't have, we don't talk a ton of commercial on the show, but I understand that multifamily is a residential product that trades like a commercial because it trades on what we call a cap rate. And the cap rate is. pretty important to understand when you're looking at a $36,000 addition to your net operating income and that value added of a million dollars. So I don't know if you want me to go through that or can you help the listener understand like how are you able to get $1 million in value with a $36,000 increase to your Edoi?
- Speaker #0
So what happens is when properties are valued on a cap rate, it really helps kind of normalize when you value properties. on a cap rate, it helps you normalize the investment regardless of what type of investment it is. Because you have all these different classes, right? You have office and commercial, you have all these different types, right? But you can't really value it based on your net income because your debt structure is always a little bit different. How much I can get a loan for and what you can get a loan for is going to be a little bit different. So it's all based on your net operating income, which is the line before the debt. And so it's your net operating income divided by this cap rate. then actually creates this kind of cap rate multiplier that gives you the value of your property. And cap rates tend to, you know, there's a long calculation on how to calculate your cap rate, but they all, they often kind of hover right around the interest rates because. You have to have, you can't really buy a property with a low cap rate. Let's say you buy a property with a 4% cap rate, and then you have a loan of a 6% loan. You're going to be upside down because you need to be able to still pay your debt because it's the cap rates based on the net operating income before the debt. So, but when you kind of calculate the value of the property, you take your NOI divided by the cap rate that does it, you know, a huge multiplier on growing the value of your property. So. At the time of our property, when we did this, it was like 2000, I want to say it was 2011 or 2012 when we did this refinance. I think our cap rate at the time was about a four and a half cap. And so that 36,000.
- Speaker #2
San Diego cap rates there.
- Speaker #0
It was 36,000 divided by a four and a half cap. And it was about a million dollar increase of valuation just from that additional 36,000. that hits that net operating income.
- Speaker #2
Yeah. Okay. I love how you describe that because you remove the debt, which is, that's how I like to describe it also. A cap rate is the return the property is producing without any debt on it at all. So a five cap, if you have no loan and you just paid cash, you're going to get a 5% return. And then that will go up or down depending on your interest rate on your loan. So I love how you described that. Cap rates are... For the listener, the cap rate is really what the investor wants or needs to earn to make that purchase. So in San Diego, multifamily, first you got a hot, attractive market. You got a really hot, attractive asset class in multifamily. People love that. It's easier to finance. It's a little safer, some people think, because people always need to roof over their head. We hear that, right? So those drive cap rates down. Now, if you have a higher risk asset with... maybe mom and pop tenants, like say a retail center with a bunch of hair salons or something, that cap rate would be much higher, right? And we get those from comps. So you comp your commercial just like you would comp residential, but what we're comping for is the cap rate. And then we back into the value from the NOI. So that would be the difference. So $36,000 saving in expense drops right to the bottom line has tremendous impact to the value. That's, I think that's what Tiffany's saying here.
- Speaker #0
I like the way you describe it. It seems a lot more simplified.
- Speaker #2
All right. So the 36,000 divided by the cap rate, you know, interesting. The way I explain that, because it's, if you have a national credit tenant like a Starbucks will still trade around a five cap right now because it's a very good solid tenant, right? Like they're not going to default. So that drives the cap rates down. I just sold or I I'm taking offers right now. I haven't signed yet, but we're selling a office tower, a cell tower lease on one of our office buildings. And it's a 4.6 cap for a T-Mobile cell tower, right? So those are good leases. People want that stuff. So really, there's a wide range here in cap. So I want to get excited about seeing something online and one building traded at a 7 or 8 cap, and then everything does. That's just not how it works.
- Speaker #0
I think the confusing thing about cap rates, which a lot of people have, and I think even it confused me originally, was that the lower the cap rate is, the higher. increase in valuation you get, which is somewhat of what you would think. You'd think you'd want a higher cap rate with a higher return, but it's also a higher risk asset, like you had mentioned. So the lower the cap rate, the higher of valuation you actually get. So as interest rates go down, that actually is going to improve it because it's going to improve the valuations of everybody's commercial property. So we're all definitely looking forward to the interest rate drops, hopefully coming in the next year. because that's going to improve everyone's asset value exponentially if it drops one to two points.
- Speaker #2
Yeah, that is right. And you're expecting that, it sounds like.
- Speaker #0
I'm hoping.
- Speaker #2
You're hoping. The interesting thing about multifamily, tell me what you're thinking or what you're seeing, because in Colorado, I was looking at a lot of these. I don't want to own multifamily, by the way. I think it's very difficult to manage those. But people love them. So I'm not dogging on the asset class. I know people absolutely love them and they are easier to sell. So there's some safety there. But the cap rates were so compressed in Colorado. I mean, they really were around the fives. And San Diego sounds like it's the exact same. I knew that already, but it sounds like it's the exact same. What have you seen when the interest rates started really increasing to those cap rates? And how long of a lag was it before you actually saw the movement?
- Speaker #0
I mean, it's definitely a longer lag. I would say they still are trading in San Diego slightly under interest rates, but they did have to lift them up. I mean, the problem is, is people get, you know, kind of married to the new value of the property. And so they don't want to lower or they don't want to increase the cap rates because it's going to bring down their overall valuation. So they kind of get, you know, in love with the idea of the new value of their property. and they don't really want to change the valuation. But again, if you're out buying, like we're out buying, it's a negotiation. Even in Florida, they want to try to trade everything at below a six and interest rates are hovering right around six. And so people want to buy at a six or higher percent cap. And it's definitely a negotiation. I think nobody wants to let go of the valuation when interest rates hike up. So.
- Speaker #2
Yeah, I saw I was seeing that too. But you did see them finally start you. I guess it's more like a seller acceptance is what I'm hearing as you describe it. They're accepting the higher rates and so they have to drop the values. You're starting to see that though, it sounds like.
- Speaker #0
Yeah.
- Speaker #2
So there's a good buying opportunities.
- Speaker #0
I wouldn't say it's not necessary. Well, we're selling in California. So we're obviously selling lower than we'd want to sell for.
- Speaker #2
Yeah.
- Speaker #0
But we are getting great buying opportunities in Florida. um it's a different market though we have higher interest or not interest but insurance here in florida than we had in california um but there's also trade-offs like in florida you don't have to have a you know mandatory on-site manager over 16 units where you have to have that in california so that's a thing yeah that drives up the cost exponentially to have somebody living on site taking up one of the units and you have to you know It's not like you can just trade them apartment for management. You have to pay them on top of giving them discounts on the apartment. And it definitely draws a lot of cash flow out of the property to have somebody living on site for 16 units, which I think is kind of a small amount for somebody on site.
- Speaker #2
Yeah, I've never heard that. I know California does some really weird things. I haven't heard that one, though. There's not enough work for someone on site on 16 units. Like, what do they do?
- Speaker #0
Yeah, I mean, that's a good question, but it's definitely a challenge. So there's lots of challenges, I think, in California. I think there's definitely a lot more headwinds, and that's part of the reason we're exiting California. It's becoming more and more difficult to be a landlord, to make any profit. Everything's statewide rent control. There's constantly policies that are preventing you from. you know, evicting anybody, you know, doing background checks on people. There's just constantly new regulations that are hindering your ability to operate with any kind of a profit.
- Speaker #2
Yeah. We're starting to see that in Colorado too. And so a lot of landlords are exiting. So it's quite sad. And what ends up happening, and you know this better than most, probably Tiffany, but it just drives up rent. Because if you take an inventory off the market, I mean, supply and demand, right?
- Speaker #0
And it drives, I mean, so for example, I think what's hard in California is it's twofold. You have this kind of cap on how much you can increase your rent. And it's even if somebody moves out and somebody else moves in, you can't increase your rent even more than 10% of the last tenant that was in there. So there's really no incentive for the landlord to upgrade the unit and bring it up to market rate, which normally was what you would do when you have an empty unit. You'd bring the unit up to market rate, you would put in new appliances or new carpet or anything like that. If you can't increase your rent more than 10%, you're really kind of creating this like slumlord, you know, environment because people aren't going to want to put any money to their units, which is not really what anyone wants to achieve. That's kind of the driving force behind that. And then on the flip side, you now have to basically give back the entire security deposit, regardless of how they treat the unit to the tenant. So for one, what's the point of even having a security deposit? it? And for two, what's the point of having, you know, good tenant behavior, you're kind of creating bad tenant behavior, like, because they know they're going to get the deposit back regardless of how they leave your unit. And then you're creating a slumlord environment on the flip side, because you don't give them the opportunity to bring the units up to market rate. I mean, to me, that's a recipe for disaster. And I see the writing on the wall, we've seen the writing on the wall. So we're not going to play in that type of environment out We're going to move our assets. You know, that. has really just taken a hold in the last few years. How that plays out 10 years from now, I think it's going to be pretty obvious what's going to happen.
- Speaker #2
Yeah, I agree with you 100%. It's quite sad, actually. This episode is brought to you by Pine Financial Group. Pine Financial is a private lender specializing in short-term rehab lending to real estate investors. Got a property that needs some love? We can help. We are able to offer funding solutions because we raise private money from individual investors. With more than 15 years of experience, Pine offers passive investors an alternative that provides stability, consistency, and security to your portfolio. If you like real estate but want to avoid the ups and downs in effort, a Pine Mortgage Fund could be a perfect fit for you. Accredited investors will experience an 8% preferred return and profit sharing. Diversify your portfolio out of Wall Street and into Main Street with a Pine Financial Group Mortgage Fund. Get more information at pinefinancialgroup.com. That's pinefinancialgroup.com. Let me make sure I understand this though in California. I don't want to beat a dead horse here, but if I buy a property out there and I want it as a rental property, am I allowed to increase the rent to market at that point since I'm a new owner? Or am I subject to the prior lease on the building?
- Speaker #0
You know, it's a good question. We've been out of there for now three years. Yeah,
- Speaker #2
it's okay.
- Speaker #0
So I don't know the answer to that question. And I haven't purchased anything in California since 2019, I think was my last purchase there.
- Speaker #2
My mind went there because if you want to sell, that could really restrict the value. I mean, that's stripping property rights, it feels like to me. And if I can't rent it for more than a certain amount, even if it's under market, I think that would impact the value. That's why my mind went there. hurt property owners.
- Speaker #0
I hope that is not the case, but I couldn't tell you.
- Speaker #2
Yeah, me too. All right. So I want to get back to this utility ranger. Colorado, similar to California, I guess, there's a lot of regulation here. And it's all about protecting, I guess, people that can't protect themselves is the idea. And part of the regulation, Tiffany, is HOAs being able to sue developers and builders on condos. With very little, you know, obstacles, like one person on the board says, let's sue him and it just starts the lawsuit. Right. So what's ended up happening is developers are starting to build buildings independently metered so that after the construction defect time runs, then they go to the condo, but they just keep it as an apartment while they're doing that. But what about some of the buildings that are existing? Would Utility Ranger help if I bought an apartment building that I want to convert to condos?
- Speaker #0
So either way, I mean, our main clients are apartment owners. So even if you're in this kind of construction default time period or whether or not you're a condo, it kind of helps either or. It's a way of basically taking. this kind of master metered expense and having the tenants or the homeowners pay their fair share. So in condos, traditionally, this is done through like either have sub meters installed or it's just done through your HOA dues. So we actually have lots of HOA clients. They do this because maybe they don't have individually metered units and they pull and kind of unbundle the utilities out of their HOA dues, which helps kind of stabilize their HOA dues rather than having to have. Their HOA dues go up year over year, making the properties less attractive for new buyers. So they do it just so they can kind of more fairly allocate the expense, you know, based on the number of occupants and maybe the size of the units rather than maybe split evenly or maybe just split off of a square foot ratio. So we do have lots of HOA clients who do that in apartments. It's kind of done the same way for tenants. you basically take the utility bill and split amongst all the tenants based on a combination of factors, typically occupancy and square feet. So it doesn't matter whether or not the property is converting. I would say both scenarios are great clients for us. You know, those, anybody who has master metered bills, really, it could even be a duplex. We have lots of clients who have duplexes and they'll only have one house metered or they have a house with like an ADU in the back and they want to, you know, make sure that ADU is paying their fair share of the utility bills as well. So. there's a variety of different applications. It's just a way of basically unbundling these, these expenses and unbundling them from rent. So, um, you know, otherwise you have to continue to increase your rent. And this happens a lot in apartments. People think, well, I'll just include this with my rent and, you know, this just keeps it simple and I'll just increase my rent. But, you know, if your rent is a thousand dollars and my rent's a thousand dollars for both of our units and I'm not including utilities and you are including utilities. My rent's essentially maybe $1,100 because I get my rent plus $100 maybe in utilities. And your rent's essentially $900, right? Because you have to eat the cost of the utilities. So now we're really $200 apart in your market rate rent. But if you marketed your apartment for $1,100, you wouldn't get the traffic of new renters coming in. So it really doesn't benefit you to include it in your rent because you'd have to have actually just such a higher rent versus what's going on in the market. which would hinder your ability to attract new tenants.
- Speaker #2
That's a really good point. So this could help with the marketing because you can market a lower rent and still get the same amount that you want, the same that you're targeting. Yeah. That's very good. I like the HOA stuff too. I didn't realize that HOAs were doing that because I thought all the HOAs that I'm in all have just one giant water bill and then we all just pay into it, right? But I'm always wondering, is someone's toilet leaking because this water is pretty expensive this month and no one's tracking that. So it would be good for an HOA board to consider something like this.
- Speaker #0
There's no incentive for them to, you know, there's no incentive. So think about it. Like if you, I always use this example, like if you go to a hotel, right? And your shirt's wrinkly, what do we all do? And maybe not everybody, but me and maybe you. But I put my shirt, you know, in the bathroom and I shower in hot water and you let it go because I don't want to, maybe I'm too lazy to pull the iron out to iron my shirt, right? And we do that because it comes with the cost of the hotel room. And so if it comes with the cost of your HOA dues or if it comes with the cost of your rent, you're not thinking about the water use. You're going to use as much as you want. You're going to take a half an hour shower or an hour shower because it doesn't matter how much water you use. Your bill is always going to be the same. So what you're really trying to achieve with utility billing, aside from all the asset growth, the value of the property. you're really trying to achieve the slight modification of behavior of your residents. You want them to think, oh, I'm going to turn off the sink while I'm brushing my teeth, or I'm going to not do a load of laundry with one shirt in there and not run the dishwasher with one dish in there, or I'm going to let somebody know that my toilet's running or let somebody know that my faucet's leaking so it doesn't cause secondary damage, which then can cost the landlord even more if you have to rip out bathroom cabinets or a runny toilet. with a bad flapper is like a $5 part, but it can lead to thousands of dollars a month in water waste. And a lot of times people just, it's not like they're intentionally not telling you, it's just, they don't want you in their unit, right? They don't want you seeing either the cat they didn't tell you about, the extra roommate that they're not putting on the lease, or the grow house in their closet that is happening. You know, they don't want you in your unit, but the second they actually get a bill that's fluctuating each month with the bill. the behavior starts to change. And, you know, when we first started, my husband's like, oh, we're going to get a flurry of move outs. And then instead we got a flurry of maintenance requests of all these people who weren't telling us, hey, my toilet's been running for six months, you know, all these things. And it's because that behavior modification is really what you're trying to achieve. So you get conservation from the tenant side, you get all your money back basically from your expense side. So you get money, more, more money in your pocket. And then the asset value goes up. overall, which gives you additional equity to pull out and use to buy more properties. So it's kind of a win, win, win. And so we basically just took this service model and turned it into a software model because nobody was servicing the little guys like us. And so I said, no more, we're going to basically make it so easy and kind of, you know, TurboTax style, you know, system to where it's so easy, anyone can do it. And that's kind of how Utility Ranger was born. And now. we have thousands of clients that do this every day and do it themselves and they see more money and more asset value.
- Speaker #2
Okay. So walk me through the process. We hire you and let's say I have a fourplex or something. That's the ideal client. I feel like, I mean, if, and if the listener out there has a two, three or four, some kind of small multi, this actually is a really good idea to do. I know of other people that have done this and it's pretty impactful. So with that said, what's the process? We hire you. you come in and put on meter? Like what does the, what's the, what does it look like?
- Speaker #0
It's actually way more simple than that. So they literally just go to our website and sign up. there's no proposals, there's no long-term contracts, there's free 60-day trial. They just go to the website and sign up and then they can either onboard with somebody from our team or they can actually just onboard themselves. It's really intuitive. So they can just put in their property, put in their units, put in their tenants, put in their utility bills. It's literally like a click, click, click, you know, put in your utility bill, review the bills, send them off and everything gets emailed to their tenants. If they do the onboarding with us, which I typically suggest just because a lot of people haven't done it before, we just help get them set up exactly the way they want for their property. There's always nuances like this person has a washer and this person has this. And so you always have those little nuances that we help them with. But we train them how to use the software. We stay with you for two, three months just to make sure that you're comfortable doing the billing for that 30, 60, 90 day period. And typically by the second or third month, people are like, oh, this is easy. we don't need you anymore. We got this. And so, yeah, it's fairly simple. They just sign up and you can start billing your clients right away or billing your tenants right away. Most of the time people need to do like a letter and a 30 day notice of change of terms. Sometimes you have to wait for the leases to expire to start doing it. So we can help, we can help them and guide them through that process. It's fairly simple. We have a bunch of sample lease templates and stuff that can kind of really get the ball rolling for them. overall it's it's fairly simple and once you start billing you won't really want to stop billing because you get more money back in your pocket each month so it's a it's a fairly simple process we just now made it so easy and available that anyone can do it so i want to use the word hardware but i don't know if that's right like equipment
- Speaker #1
is there like equipment or how does how does it measure the water usage separately so we do something called rubs which is different than a sub meter.
- Speaker #0
So a sub meter is actual hardware that's on each individual unit.
- Speaker #1
Yeah, that's what I'm visualizing.
- Speaker #0
Yeah, so that's like the most ideal scenario. But I mean, the dirty little secret with sub meters is they're expensive. Now you need sub meters, you need sub meter reading equipment. You typically need like a reading hub and you need the Wi-Fi for all of this to read. And, you know, typically they fail after 10 years or five years and they never, the meter reading equipment and the meters, they never fail at the same time. There's very few people who know how to program and work on them and it can just get really expensive. So outside of putting a sub meter on, which, again, is the most ideal to get the exact measurement, we do something called rubs, which is the next best thing to sub metering, which is, you know, you can't necessarily divide all the usage equally amongst the unit because, you know, family of five in one unit, grandma next door. So it takes a combination of occupancy and square feet to, you know. People who would three, four tenants in a unit are going to pay more than, you know, grandma and the other unit. Bigger units are going to pay more than smaller units. So it's that combination. It's basically a mathematical calculation to do it the most fair way outside of installing submeters on your property, because a lot of people don't have the capital to do the submetering system in the first place. So our system is a REPS only software. So you don't need any equipment and you just put in the square feet of the units, how many occupants are in each of the units. And it formulates it all. We have all these like additional, you know, advanced features where this unit has a washer. So I want to put a little bit more on that unit. And all those little nuances are taken care of that we help people set up. But, you know, essentially it's a fancy calculator that's dividing it in the most fair way possible outside of the sub meter.
- Speaker #1
Okay, that's cool. So that brings the cost way down, makes it very easy. So you could completely set this up on your properties right now just from your desktop.
- Speaker #0
Yeah, yeah. And it's essentially free. So we charge like three dollars a unit per month. But then that fee actually gets passed through to the tenant as an admin fee. So essentially it's free for you. And we actually allow them to increase that fee, you know, five dollars, six dollars a month to the tenant because they're actually the ones administering the billing. So they can take that as an administrative fee so they can actually make two or three bucks per unit per month as an additional revenue stream just for doing the billing in-house.
- Speaker #1
Sounds like a great option here. So you've been doing this for a little while. I think 2008, you said you were doing the... 2008 is an interesting time to start, by the way. That's when I started Pine Financial. That's when you started the apartment side. 2020, did I get that right? That you started Utility Ranger. So you've been doing it for five years now.
- Speaker #0
Yeah.
- Speaker #1
Tell me, what's the biggest challenge?
- Speaker #0
I think it's just awareness, getting out there, growing. So we started in 2020. In 2021, we took an investment from the 10X Incubator, Grant Cardone and Jared Yellen. They acquired half our company. We didn't have the software completed at that point. We raised our friends and family around shortly after that, completed the software. We actually went live in 2023. So we've just been live for a little over two years now and growing exponentially. But it's just getting out there because, you know, most people aren't like the big apartment associations. They're not marketing to our core client. You know, most of our clients, they're not going to the National Apartment Association or these big. tech shows, most of them are listening to podcasters and going to mastermind groups, watching bigger pockets. It's like a different layer of owner, investors, and operators that don't kind of play in the traditional multifamily space. And so that's really kind of who we're going after and who, because this niche has been really largely ignored by the prop tech companies, which actually is funny. It makes up half of the multifamily supply in the US. is largely ignored from the prop tech companies because unless you have a thousand units or an institutional player, you totally get ignored. And so we're really kind of set out to change that because, you know, us, you know, we're all mom and pop investors and we definitely have value. We really deserve the same opportunities to grow our portfolio that the big guys have had for years. But a lot of the prop tech companies don't really know how to get in to this market. Um, and so as an owner operator, I feel like I know a lot more about where all these people play because I'm in these same environments. Right. Um, and so just kind of getting the word out in these environments, we do a lot of podcasting. We do a lot of masterminds, um, you know, just trying to get awareness about what we're doing and showing people how easy it is to do the same thing that big guys are doing. Um, but making it available to everyone like us.
- Speaker #1
I just read an article in Scotsman's Guide, and that was this morning. And so I think I'm accurate when I say this, but I might be off a few percent. But like 88% of landlords are mom and pop, five units or less. That's a huge number. We all think these big institutions own all of these rental units, but it's not. It's people like you and me.
- Speaker #0
Yeah. Yeah, it is. And we don't always have the tools, or sometimes the tools are just really expensive and not available for us. Um, so again, I just think, I feel like I'm serving the people that I kind of fall into the same niche and we've had so much success on our own portfolio from doing something that's really so simple. That's kind of my mission is to kind of be that like little helper to that little guy like me.
- Speaker #1
Well, you're changing the game and I can see that you have a lot of passion for it.
- Speaker #0
Yeah, definitely.
- Speaker #1
I'd love to just go through a couple of notes here with you, Tiffany, what I, what I got out of the episode. And if you want to fill in like add color or. If I'm missing anything, just please let me know. And then also start thinking about maybe a final piece of advice for a newer mom and pop real estate investor. That would be great. So we went through your story a little bit about how you got started with your husband and you joined him to manage properties, which you hated. And I can relate to my wife's the same way. But you really like the utilities. And what you said was you've identified that utilities can be as much as one third of your expenses. So if you could attack that, you could really add value, add cash flow and add value. And then we talked about rubs, the ratio, utility billing. We talked about your $36,000, how that turned into a million dollar gain. And that was a cool story, how you pulled that money out to help move into a different market. Yeah, not only is it worth it to a buyer, which is great, but it's also to a bank it's worth it. So you could pull some cash out. BRRRR 2.0, you call it, and it's instead of rehabbing, it's a... Maybe it's rubs, right? I don't think you use that term, but it's really just adding income through reducing expenses. We talked a lot about cap rates and how the in the apartment space in any commercial real estate, that's how that's valued. And that was a really great conversation. I appreciate you having that with me. And then you said you, what I really loved about this is by billing back the utilities, you could change behavior. And I see it, you know, I didn't say this, but my dad was my dad had a he's in a single family home. And he was complaining about his utility bill jumping one month because he had a leak he didn't even know about. Now, how many people in an apartment building have leaks they don't even know about? So as a landlord, we need to know which unit so that we can fix that problem, right? So this is a way to potentially do that. Although yours is a math equation, not an actual meter. So maybe that's not as accurate. And then getting yourself out there. I wrote that down. Oh, that was your biggest challenge that you're facing right now is just getting to the right audience. And the audience is the same as my audience, which is probably why you're on this podcast right now. The newer mom and pop real estate investor. All right. How'd I do?
- Speaker #0
I think you're spot on.
- Speaker #1
Cool. What's the final piece of advice?
- Speaker #0
I would say, you know. When you're looking at real estate investment to invest early, don't be scared. I think it's, people are kind of like, they want to have this like linear thinking where they want to, oh, I have to do this before I do this. There's so many ways to kind of get going. And the sooner you jump in and, you know, buy your first property, buy your first duplex, buy your first fourplex, the sooner you're going to see the benefit of it. And then there's all these little ways that you can really. kind of hack your NOI and grow from there. But just get started as soon as you can.
- Speaker #1
Invest early. I love that. All right. How do we get ahold of you?
- Speaker #0
You can get ahold of me on any of the social media platforms. Tiffany Mittal is my handle or Utility Ranger. You can go to utilityranger.com and find me there.
- Speaker #1
Cool. So I don't need to Google it. I just do utilityranger.com and that'll take us right to the website so we can get signed up for this rub reimbursements. You were great. I know you have a lot going on. You're managing apartments, which you hate. You have the utility ranger that you're spending a lot of time. It sounds like you might have Grant Cardone as a partner. So I can imagine that's taking some time. And you still came on the podcast with us and helped our audience. So I'm very grateful for you, Tiffany.
- Speaker #0
Thank you so much.
- Speaker #1
For the listener, you have other podcasts you could be listening to, and you chose to tune in to The Real Estate Educator. Hopefully you got some value of that out of this episode. I'm so grateful for you. Please five-star reviews so we can help more real estate investors just like you. And with that, I hope you make this day a great one. Hey guys, I hope you enjoyed this episode as much as I did. If you did, please be sure to follow and leave us a review. Oh yeah, and tell a friend.
