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Ask for the Utility Bills Before You Fall for the Numbers A pro forma is a beautiful thing. Clean rows, tidy assumptions, a cap rate that makes the whol...
A pro forma is a beautiful thing. Clean rows, tidy assumptions, a cap rate that makes the whole deal look like it was engineered in a lab. And utilities usually get a single line on that spreadsheet, an estimate rounded off to something that keeps the math working.
That one line is where a lot of Franklin acquisitions quietly lose their margin.
The fix costs you nothing and takes one email. Ask the seller for twelve months of actual utility bills before you get attached to the returns.
When someone builds a pro forma, they're motivated to make the numbers land. That's not sinister, it's human. Utilities are one of the easiest lines to soften because most buyers don't push back on them.
The trouble is that a Franklin summer and a Franklin winter are not gentle on an HVAC system. A place that sits comfortable at 72 in October will run its compressor hard in August and its heat strips in January. An annual average hides both peaks, and the peaks are what actually hit the account.
For a rental where the owner pays utilities, or a small multifamily with common-area meters, those seasonal swings compound across units. A number that looks fine per month becomes a real drag once you multiply it out across a year and across doors.
One month tells you almost nothing. A full year tells you the story, including the two or three months that break the average.
Look at the spread first. If the property runs $140 in a mild spring month and $410 in August, that gap is your real signal, not the tidy average someone wrote down. A wide swing points at insulation, older windows, an aging system, or ductwork that's fighting itself.
Then look at trend. Bills creeping up year over year on similar usage can mean equipment losing efficiency, which is a repair or replacement conversation you'd rather have before closing than after. The bills are one of the few documents in a deal that can't spin you.
Meters just count.
Water and sewer around here can be its own line worth studying, especially on older properties or anything with irrigation. A green lawn in a Westhaven-style neighborhood in July has a water bill attached to it, and if that irrigation runs on the property's meter, it belongs in your numbers.
Older homes closer to downtown Franklin, the ones with charm and original character, sometimes carry heating and cooling costs that a newer build in Berry Farms simply won't. Charm is worth paying for. It's also worth knowing what it costs to condition.
Well and septic properties out in the more rural pockets of Williamson County change the equation entirely. No water bill, but you'll want to understand the pump, the electrical load it draws, and the septic maintenance history instead.
Request the bills the same way you'd request a lease or a tax record: as a normal part of your due diligence. Most sellers expect it, and the ones who hesitate are telling you something too.
Ask for the account statements, not a summary the seller types up. You want the actual bills or a printout straight from the provider's account portal, covering the trailing twelve months. If the property changed hands recently or sat vacant for a stretch, ask for whatever exists and note the gaps.
For occupied rentals where tenants pay their own utilities, you can often ask the provider for usage history on the address without the dollar amounts, since usage still tells you how the building performs. That request usually goes through the current owner's authorization, which is worth lining up early.
Once you have the actual figures, drop the true annual utility cost into your model and see what happens to the return. Sometimes it barely moves. Sometimes it turns a marginal deal into one you pass on, or a decent one into a stronger negotiating position.
That second case is the useful one. If the bills come back higher than the pro forma claimed, you now have a documented reason to revisit price or terms. "Your estimate said $180 a month, the account shows $310" is a hard fact to argue with, and it's the kind of concrete lever we lean on at Redbird Real Estate when we're helping a client structure an offer.
The point isn't to kill deals. It's to buy with your eyes open, so the property you close on performs the way you expected on day one.
Treat utility bills as a standard document, right alongside the lease, the tax bill, and the inspection. Ask for them every time, on every acquisition, even the ones that look clean. The clean-looking ones are exactly where a soft utility line does the most quiet damage.
The whole request fits in one email and the review takes a few minutes once the statements come back. For that small effort you get the one set of numbers in the deal that nobody can dress up. On a Franklin acquisition, where a hot August and a cold January both leave their mark, that's worth asking for before you fall for anything else on the page.