Metering electricity with secondary prepaid electricity meters is a great way for real estate investors, homeowners, and real estate agents to avoid the risk of having to pay utility bills for electricity when tenants don’t pay.
However, feedback from the field shows that prepaid electricity meters have other benefits as well. Customers who have installed prepaid electric meters in their rental units are telling us that one of the exciting benefits of using prepaid meters is that they are directly reducing tenant turnover.
Sean Wheller, a downtown Johannesburg property investor, has installed prepaid meters in all of his rental units. Wheller had this to say about his experience with the meters: “When I installed prepaid meters it was with the goal of reducing risk. The meters accomplished this. Then, over time, I found that the number of disputes over electric bills was eliminated by complete.. With fewer disputes, our tenants have been more satisfied with our services. Soon after, we noticed that more of our tenants were renewing their leases. Typically, most tenants would not renew. I am convinced that improving relationships have occurred because of prepaid electric meters and, as a result, is one of the main reasons why more tenants are renewing their leases.”
Building a good tenant base is a key factor for both real estate investors and real estate agents. They want to keep good tenants for as long as they can. The more good tenants an investor or real estate agent has and the longer they stay as tenants, the more profitable their buy-to-rent or rent-out transaction will be. Advertising and tenant verification costs are one of the main costs that affect the profits made during the rental period. When a rental unit has high tenant turnover, these costs must be amortized frequently over the term of each lease. It stands to reason that if landlords and leasing agents can reduce tenant turnover, they will incur less marketing and verification costs, and increase overall leasing profits.
Field research by PrepaidMeters.co.za shows that tenants residing in rental units equipped with a prepaid electricity meter are generally happy with the financial arrangement of the electricity bill. The main benefit reported by tenants is that, thanks to the meter, they can monitor exactly how much electricity they are using. Renters also report that they like to know how much they are spending, since they are paying in advance and don’t have to fear receiving a large electric bill at the end of the month.
Renters who use prepaid meters have also praised the convenience of the meters. Mavis Mteto rents an apartment in Joubert Park and had this to say about the meter her landlord installed: “From the meter, we know how much we use. When it’s finishing, we’re not going to buy credit there at the store. I’m paying the landlord with mobile banking and then I send SMS to get the number at any time”.
The level of convenience is attributed to the fact that prepaid meters provide metering and selling functionality in a single unit. While some prepaid meter systems provide only a metering solution, some combine metering and selling functionality. The advantage of this is that the sale of credit tokens is an integral feature of the meter. The disadvantage of using meters that only provide a metering solution is that the tenant must use a card system and must visit a store for additional credit. This can be inconvenient for tenants. Cards are damaged, lost, and renters often forget to purchase additional credit before their current credit is used up.
PrepaidMeters with sales solutions are simple, yet effective and very convenient for both the owner and the tenant. Tenants pay money to the owners’ bank account for electricity using Internet or telephone banking services. The lessor credits the amount paid to the lessee’s accountant. The tenant then uses their cell phone to send an SMS requesting a 20-digit credit token. In this way, the electricity credit can be easily purchased at the office or at home.
Tenants can request credit tokens up to the credit value assigned to the prepaid meter by their landlord. Credit tokens can be requested at any time of the day or night using SMS technology. For example, if a tenant deposits R200.00 with a landlord for electricity, the tenant can get a 20-digit credit token for R200 or any lesser value. If a renter requests a 20-digit credit token for R100.00, the renter will still have R100.00 as remaining credit. This can be requested at any time by simply sending another SMS to request a new credit token. So if the current value of the credit token is consumed at 7pm at night while watching a football game, all the tenant would do is request another credit token and they would immediately restore their electricity. No need to leave home and miss the game. In less than 2 minutes electricity is restored.
This level of control, flexibility and convenience is attributed to the comprehensive nature of the retail functionality provided with all prepaid meters. Avoid any resentment on the part of the tenant for having to use an electricity metering solution that is prepaid. With these benefits and control, tenants are in control, but homeowners are protected. Lease period disputes are reduced and lead to better tenant-landlord relationships. As experience in the field shows, improving relationships is having a positive impact for landlords and tenants, resulting in more tenants renewing their leases.
