Increase your profits with prepaid electricity metering

Metering electricity with secondary prepaid electricity meters is a great way for real estate investors, landlords and real estate agents to avoid the risk of having to pay electricity utility bills 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 electricity 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 real estate investor in downtown Johannesburg, has installed prepaid meters in all of his rental units. Wheller had this to say about his experience with meters: “When I installed prepaid meters it was with the goal of reducing risk. The meters did this. Then over time I found that the number of disputes over electric bills was eliminated by .. With fewer disputes, our tenants have been more satisfied with our services. Shortly thereafter, we noticed that more of our tenants were renewing their leases. Normally, most tenants would not renew. I am convinced that the improvement of relationships has come about because of prepaid electricity 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 real estate investors and real estate agents alike. 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-let or lease operation will be. Advertising and tenant verification costs are one of the main costs that affect the profit obtained 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 settlement of their 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 say they like to know how much they’re spending, since they’re paying up front and don’t have to worry about getting a big electric bill at the end of the month.

Tenants using prepaid meters have also praised the meters’ convenience. 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 over, 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 vending functionality in a single unit. While some prepaid meter systems provide only a metering solution, some combine metering and vending 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 to obtain additional credit. This can be inconvenient for tenants. Cards get damaged, lost, and renters often forget to purchase additional credit before their current credit is used up.

PrepaidMeters with vending solutions are simple, yet effective and highly convenient for both landlord and tenant. Tenants pay money to the landlords bank account for electricity using Internet or telephone banking services. The landlord credits the sum paid to the tenant’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 in the office or at home.

Tenants can request credit tokens up to the value of the credit 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 anything less. If a renter requests a 20-digit credit token for R100.00, the renter will still have R100.00 credit remaining. This can be requested at any time by simply sending another SMS to request a new credit token. Thus, if the current value of the credit token is consumed at 7 pm at night while watching a football game, all the tenant would do is request another credit token and 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 vending functionality provided with all prepaid meters. It avoids 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 landlords are protected. Disputes over the lease period are reduced and lead to better relations between tenants and their landlords. As field experience shows, improved relationships are having a positive impact for landlords and tenants, resulting in more tenants renewing their leases.