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Global Investors Podcast
GI36: Decreasing Operating Expenses Through Water Conservation with Anselmo Torres And Kelly Stinson
February 26, 2020
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Decreasing Operating Expenses Through Water Conservation with Anselmo Torres And Kelly Stinson (Youtube)

ANSELMO TORRES III – Water Conservation Program Specialist.

KELLY STINSON “The Potty Princess” – National Sales Manager, SAS.

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Transcript:

Announcer
Welcome to the Global Investors Podcast, a show that focuses on helping foreign investors enter the lucrative US real estate market. Host, Charles Carillo, combined decades of real estate investing experience with a professional background in international banking to interview experts in all areas of US real estate investing. Now here’s your host, Charles Carillo.

Charles
Welcome to another episode of the Global Investors Podcast. I’m your host Charles Carillo. Today, we have Anselmo Torres and Kelly Stinson. Unlike our other guests we’ve had on the show, these two focus on cutting expenses and increasing the bottom line by decreasing water consumption at multifamily properties. And someone has walked over 30,000 units and created a program called LeakAware to help monitor water consumption at properties and Kelly in 2019, save multifamily owners over $2 million on their water and sewer bills, which is over 200 million gallons, which is pretty incredible. So thanks so much for being on the show.

Anselmo
Thank you.

Kelly
Thank you for having us today.

Charles
So it’s awesome to have another like I said was another tactic we were talking about earlier another tactic for investors of saving money. And it’s also interesting because usually, with saving money or making more money, it’s sometimes doesn’t run parallel to the environment. So it’s great to have a tactic that actually will help the environment that actually helps the bottom line as well. Absolutely. So can you guys give a little background of yourself prior to starting with your current company, SAS?

Kelly
Sure, somebody you want to start out?

Anselmo
Yes. So I am originally from Arizona. I also grew up and my dad was an engineer. So he was all about efficiency, and finding efficiencies and everything that he did and, and obviously growing up in Arizona, there’s not much water so I can’t tell you how many times I heard turn off the faucet, turn off the faucet, you know, turn off the faucet. So many times, it’s been ingrained in me too. You know, think about water conservation. So that’s, I got an multifamily about three, four years ago and then in the water conservation space specifically, and it just, it’s excited me it’s rejuvenated me. So here I am today.

Kelly
Yeah, it’s great. So, for me, I’ve taken a little bit of a different journey. You know, I grew up in Southern California, where, you know, water seems to at the time seemed to be very plentiful, and it’s not so much now. But as I moved into my professional career, some of the individuals I met that I met along the way significantly influenced me and inspired me around expanding my interest in water and energy conservation. So as I entered into one of my other professional partnerships, I had a tremendous opportunity to help launch and water and energy division, and it was extremely successful, and I really got a lot of drive Out of that, but here’s the challenge I had was that I was reading so many different components around the water and energy. And really my passion and excitement is digging into the water. And that’s where I was introduced to an executive inside of Niagara conservation, who is the manufacture of the world’s most efficient toilets. And, and having a conversation with him. He had suggested that I meet with somebody at CES and he said, Hey, you want to get laser focused and where your passion is, you want to get excited every day. And that’s where this evolved. And I knew within five minutes of sitting down with these individuals, that this is where my home is. And you know, we talked about having that passion and having that drive of bringing the education but in addition, you know, we’re saving our clients a ton of money, and then we’re also being able to would make a more sustainable environment for us to leave behind for our children.

Charles
So yeah that’s that’s awesome. So what is it? What is the process normally? So if a I’m you know, I imagine to me multifamily is where your clients have saved the most money for what we’re talking about here is that true multifamily investors are the ones you usually work with.

Kelly
Yeah, so our sweet spot is really in multifamily. But we also partner in in hospitality, student housing as well as military housing. But here’s the thing is that there is such a significant focus on multifamily investments, and Class B and Class C value add properties. And this is where there is the most tremendous upside to one. reduce operating expenses relative to water and sewer bills by 20 to 40% and an Doesn’t matter if you’re rubbing it back, or if it’s an All bills paid. And then in addition, a lot of these investors are holding the properties for, you know, five to eight years. So this actually will allow you to boost that asset value. So you’re able to benefit at the repositioning of the property as well by increasing that asset value. So let me just kind of give your listeners you know, a quick example if we have $100,000 water bill, and we help that owner reduce that water and sewer expense by 40%. Then we’re looking at a $40,000 year one reduction. And if we take that by an average cap rate of say, 6%, we’re looking at what you know, close to $500,000 asset value boost, and the average ROI on these projects is 12%. 16 months. So it’s like a no brainer, you know, you’re reducing water consumption by 30 to 60%. So your millennial residents love that you can market your property like that. And then you’re reducing the water and sewer 20 to 40% and boosting the asset value. And so we help through the process, we help with the whole consulting aspect of it, of taking a look at what the property is currently utilizing. And where we think we can get that property to is that property will support ultra high efficiency plumbing fixtures, and then we project manage everything. So we do all the dirty work for you. And then we help post install to ensure that these investors are basically you know, still benefiting from the reduction in the water sewer bills and then we help out on with the legal air software for post install if they’re looking to manage those spikes and the water consumption This is the secret sauce to all of these new investors out there or even that 10 year old investors who have always been old school that we go in, we buy a property we you know, we put in new flooring, we put in these beautiful countertops, we change out the faucets, we throw some paint on the walls, we make it beautiful, but they leave these 30 year old giant toilets in the bathrooms, and they’re using like three and a half gallons per flush. And most residents are going to flush the toilet when maybe three times a day,you know.

Anselmo
The EPA.

Kelly
Yeah, the EPA says five times three to five times a day. We run our calculations at three times because we hope that you know they’re out off at school or they’re off at work. So they’re going to flush in the morning and the evening. That’s a lot of water. And those three and a half gallon per flush toilets have those like rubber flappers in them that over a period of time. They start to Curl up on the edge. I don’t know if you look inside your toilet tank at home, but

Anselmo
everybody else

Kelly
But they start to curl up and then they start to leak. And they call him the silent leaks. And that’s what and so I was so gifted at is that he can hear those silent leaks. He’s like the toilet whisperer. So with that, you know, when you have a leaking toilet, you can easily be leaking out what 100 gallons or so a day that that Boehner is either paying that bill and they don’t recognize that because that leak is tied to the entire property. And it is basically extrapolated across, you know, let’s say 150 units, but they don’t recognize that actual impact. So that’s where insell mo and sa s and I’m really come into play. We help to dissect each individual property.

Charles
Nice. So when do people usually? Or when do you suggest people to actually come to you and go through a process of reviewing their properties that is that usually done before they’re doing any renovations? Do you have people come after during hot? Where do you suggest people to come and for you to give them an evaluation?

Anselmo
Well, the smart ones will engage us at the very beginning.

Kelly
We don’t want to offend any listeners out there. So the ones that are like truly innovative No, like I know where the secret sauces and the secret money, we’re, we’re going to be on their top three phone call list of Hey, I just found this deal. And I want to analyze it, and can you help me so I think in some ways, can kind of walk walk you through that process on what that proposal looks like?

Anselmo
Yes. So, obviously at the very beginning, it’s really simple for us to put together a super, super conservative pre proposal. And all we need on a pre proposal is just the property name, the address, and then the unit mix. So if it’s 100 units, if it’s 51 by ones and 52 by twos, that’s all we need to put together a super, super conservative pre proposal that they can include on their offer.

Kelly
Yeah, and that helps them on the front side, be a little bit more competitive, because especially like, you know, there’s, you know, we call them, you know, the hot zones throughout the US. You know, everybody seems to want to put their foot into DFW, but it is so competitive. What many investors don’t recognize though is that in DFW, I’d say a very small percentage of Those investors are actually taking that extra step to look at the water conservation because they’re aware of it, but they’re not correlating the financial impact on to an ally for the property. So this is where they can actually sharpen their pencil, we take a very conservative approach, and then hopefully they get to an ally. And then we will at that stage work with them during due diligence, or after they close, where we’ll come in during a full assessment. That’s where we’re accessing what 100% of the units

Anselmo
Yes, 100% of the units and, and what we’re doing is we’re going into every unit, and we’re going into every bathroom, and during this process, we’re looking at the floor rates of your toilets of the shower heads and the elevators that are on the bathroom faucet and the kitchen faucet, and we’re documenting what those flow flow rates are listed on those fixtures. At the same time, we’re also watching for leaks listening for leaks, because we want to document that and give it back to the owner of that property. A lot of the times, those leaks haven’t been reported into their work order system. So it’s a great opportunity for us, we’re in the unit, that’s what we’re observing. We can hear those silent leaks at the residence, you know, just have to now or just don’t know that that’s what a leak is caused, the leak is actually taking place in their unit. So we give that feedback to the owner once we’re done with that assessment.

Charles
So with the toilets, they’re very low maintenance as well. Like you said they didn’t have the explain a little bit about the toilets, how they different from a normal one.

Kelly
Yeah. So it’s super exciting. And you know, not and I’m going to put this disclaimer out there not all toilets are created equal. So there is. These are our niagra toilets. This is what SAS exclusively installs. And we are very specific about the products that we install. And we have selected niagra because they are the most innovative, the most efficient, and the products actually work. So with that, and there’s that negative stigma around low flow toilets right here, this Oh, I’ve got a 1.28 gallon per flush toilet, I’ve got to flush it twice, you know, to get the ways to go down or it clogs all the time, will niagra actually re engineer the toilet, and when they re engineer the toilet, they are able to put the tank in the bowl together with a patented vacuum assist technology. So in a very simple terminology or explanation about this as there is an air pocket that’s created in the back The trap way between flushes. So when you flush the toilet, it’s essentially siphoning all the waste out like the force of one of those airplane toilets. But all of the flushing is occurring under the water. So it’s really really quiet. So that’s why they call it the niagra stealth, which is makes a lot of sense. And so then they they only use point eight gallons per flush. So when it siphoning the waste at that point eight gallons is basically rinsing the bowl and then pushing the waist down the line. So you have that. And then also the niagra stealth toilets do not have any flappers. And so by them having no flappers, that means that they are virtually maintenance free, and you don’t have to worry about those ongoing leaks and niagra has expanded on their warranty and They’re warranty on their toilets is 15 years, which is a, which is a premier warranty in this space. I mean, a lot of the other, you know, manufacturers in the market, they’ll only offer maybe a one year or a two year warranty. But Niagara actually is backing their product for 15 years. And that’s part of the reason why we’re partnering with them.

Charles
Awesome. Yeah, it’s funny cuz I was speaking to a property manager yesterday, and they actually do a every six months, they try to walk every one of their units. And this is for the reason for the for the water to make sure that stuff’s not running stuff. I mean, what a waste of time because it’s a I mean, those they just go out doesn’t matter how new the toilet is, like you’re saying it those the those those kids go out and even though they’re very inexpensive, they have to be done. And the main thing is something has to call them in which like you said, people people aren’t going to call them and especially if they’re not paying you know, which Lot of these older buildings, it’s all done where it’s a master, you know its master by the landlord law, the newer buildings are individually metered as we see in Florida. But, yeah, that’s very interesting. So what is the cost? Obviously, it can’t be that expensive if they’re getting it back in 12 to 16 months. What is it for the what is it for, let’s say a one, one or two one or what you guys want me to do size apartment.

Kelly
So we keep it very simple. There are of course, there’s some variables out there. So as long as we can put a trailer on site with the product, and we don’t have to shuttle it back and forth. You know, our kit cost is 275 per bathroom. And that kit cost includes all of the materials so you’ve got your toilet, you’ve got your shower head, you’ve got your bathroom, air Raiders, and a kitchen aerator is if we’re going to be in there and upgrading the toilets. We might as well help you guys out with you know the other water efficient devices that we can adapt onto those faucets and classy You know, even Class B properties, and you have to that includes labor that includes the dumpster, the trailer that includes your full assessment with us being able to articulate exactly where we’re looking to get your water savings achieved, and the front of the wall leaks. I’m not sure that I’ve seen a report go out yet in the last 90 days, that hasn’t had at least a couple of those shower tub diverters that had been on the leak report as they’re consistently running, they won’t turn off. And you know, when you go into a shower tip combination, and you pull the handle to engage this wonderful, you know, 1.25 gallon per minute or one and a half gallon per minute showerhead, and that flows coming out, but you’re still spitting out, you know, three and a half gallons a minute or so from that tab. diverter. Yeah, your routing the potential savings there. So by us providing that punch list that’s included in that to 75.

Charles
What is the the area around the faucets? Is that a new a different jet or a different? It’s a different heat? Because some people might not understand what that is.

Kelly
Absolutely. So I actually have one right here. Yeah, and by the way, these fees come in. Yeah, these come in different finishes. And this one is just a chrome plate. So mean, I don’t know somebody might have to zoom in, but it’s very small. So what happens is when you have your faucet, all of your faucets out there today, the majority of them unless you’re in class, say will already have the screwed up in there, but they’re going to be running typically at like a one and a half gallon per minute or maybe you know higher than that depending on if somebody’s already taken them apart. So we’ll unscrew those and then we just screw these in. And the nice thing about these particular aerators is you really can’t take them apart like I just took the gasket apart because of Is What You know, connects up in. But you can’t take these apart. So how many of our owners out there have tried to put in these great water saving showerheads or these air Raiders, but then the residents go in, and they take out the pressure compensating devices inside of them. So these are designed so that those residents are going to be deterred from actually doing that. So you’re able to continue to achieve that. So we do test these along the way during our full assessment, because not all faucets will accept these. So they might need adapters along the way. So we share that back because the last thing we want to do is prepared analysis where we’re making a representation to the owner about hey, this is what your reduction and water and sewer expenses going is going to look like. They engage with us and an installation. And then we get on site and we’re like, oh, we can install in 30 of your units because your faucets won’t accept it. So these are the things that we look forward to mitigate. any of that stuff along the way?

Charles
Awesome. Yeah, that’s that’s great to have. Because obviously most real estate investors are not professionals in this respect of water conservation. But obviously they know that it goes to the bottom line that’s so important for themselves and their investors. Yeah. What’s the timeframe on something like this from the time that you say you start working on a property and it can be complete?

Kelly
Oh, my goodness. I can’t believe we forgot to touch on that earlier.

Anselmo
Yes. So typically, our crews, once they’re on site, they can do anywhere from 50 to 60 units a day 6050 to 60 bathrooms a day. So they’re moving, they’re efficient. They This is all they do. We have 13 crews that travel the country for us doing this. So they are professionals.

Kelly
Yeah. And in addition to that, we put a quality control project supervisor out on with all of our crews so that way, this individual is not doing any installation. Their responsibility is to basically be the the point communication on the property between residents on site management, also our internal teams. And then also they are q seen that installation crews work. Because as they’re working through certain environments, you know, things can happen, right? They might screw one of these generators on crooked or the cocky may not be very clean. So we check all that at the point of installation to reduce those number of callbacks or a negative resident experience.

Charles
Wow. Yeah, that’s, that’s, I mean, 50 to 60 minutes a day. You can do a complex very quickly in that, no matter how large it is.

Kelly
Yeah. So we get that cash flow up within the first full monthly billing cycle. That’s the cool thing. Don’t make it in house because you take it in house, it’s going to take you like three or six months to get it going. We’ll get it done in a week.

Charles
Yeah, having having contractors that actually know and do this all day long, then it goes so much quicker. But we were talking earlier about previous to the call about the increasing water and sewer and since you guys are all over the United States, how do you see that? Which which direction? Is that going in there all the costs for all types of resources going up like this?

Anselmo
Definitely up. I mean, if they didn’t go up in 2020, what we’re seeing is even in some of the larger Metroplex is that haven’t seen an increase over the last three to four years. It’s already in the budget for 2021 2022. Right? So we’re, I was just looking at the Cleveland right, they are projecting almost like a $71 increase. And that’s most of it is attributed to soar, right, because most of their swords going into Lake Erie. And they want to minimize the amount that’s going into Lake Erie. So they’re increasing that expense and it’s happening across the United States.

Kelly
Yeah. And it’s and it’s varying as far as the, as far as the increased percentage and what’s scary for any investors today is that if they’re, you know, canceling a deal right now, and they’re looking at the T 12. And they’re not digging in to the specifics where and fellow and myself, you know, love delivering about where the rates going, they could they could potentially be setting themselves up for a significant reduction in their cash flow on property. So that’s where, you know, we typically recommend for these investors to reach out to us on the front side, we are more than happy to share the education on what we understand in those markets. We’ve got a lot of relationships all across the country. We get alerts on things that are coming up. You know, like Atlanta has the highest water rate in the country, yet Still a huge market to be investing in. But that’s like the super low hanging fruit for any investor of hey I’m buying you know a 1960s 1970s build property it’s in you know Macon Georgia and the first thing they should be doing is seeing if there’s been any interior plumbing upgrades around toilets shower heads and hair Raiders and if not get a call in to us.

Charles
yeah, that’s important because during the due diligence process with properties we always would tell people they’re always look the thing that they’re checking with the with the state or the city on the county is the taxes that’s the big thing they have to worry about in the future. It’s never ever said that people have to check the future rate of what water is they usually see what water is like okay, that’s gonna be next year and five years down the road and that’s obviously not, not how that the way it’s going.

Anselmo
And we can’t control the rates obviously they’re gonna go up, regardless but we what we can impact is the amount of your property is actually consuming. So that’s where we come into play.

Charles
Awesome. Well, it’s great. Well, thank you very much for being on the show. How can our listeners learn more about you guys? And SAS?

Kelly
So we’re both very active on LinkedIn. So you can reach out to us through LinkedIn. We also have a full website, which is available at sasconserve.com. And on there, we have a contact us button, you can just fill in, you know your contact name and your email and you might want to, you know, just put a little note here on the podcast, and we’ll get in touch within 24 hours. And you could also follow and reach out to me through LinkedIn through our hashtag because for whatever reason I’ve taken on this nickname and the industry is the Potty Princess. As a joke, somebody introduced me that way about two years ago at an event and You know, we all attend these events. And so now it’s just kind of, you know, cycled across.

Anselmo
Gotta have fun with

Kelly
Different events. And, you know, toilets aren’t sexy. And so we make it fun. And while we’re, you know, delivering a really impactful opportunity here, we’re trying to, you know, laugh along the way. So I’m owning it, I’m living it, it’s fine. And so you’ll see that out there on LinkedIn. And then and somehow I think, you know, you’re consistently contributing content out there.

Anselmo
Yes, I’m very active on LinkedIn. So find me on LinkedIn, or you can call me directly. So give me my phone number. It’s 214-914-1139.

Charles
Okay, awesome. So I’ll put all that contact information in the podcast notes. And I want to thank you guys again for being on the show.

Kelly
Thank you so much.

Charles
Hi guys, this is Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in investing in real estate and you don’t know where to begin, set up a free 15 minute strategy call with me at schedulecharles.com. That’s schedulecharles.com.

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Announcer
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of harborside partners incorporated exclusively.

Links and Contact Information Mentioned In The Episode:

About Anselmo Torres And Kelly Stinson

ANSELMO TORRES III, Water Conservation Program Specialist

  • Created a software program called LeakAware that helps multifamily properties monitor their water consumption & detect high consumption / leaks.
  • Walked over 300 properties across 30,000+ units performing audits & collecting data.
  • Passionate about water conservation and sustainability and saving our most precious resource one leak at a time.

KELLY STINSON “The Potty Princess” – National Sales Manager, SAS

  • Passionate about water & energy conservation and the influence we have to improve the environment
  • “Potty Princess” nickname caught traction 2 years ago through my continued commitment of bringing awareness, education, & support across the country to multifamily property owners relative to the financial and environmental impact of old toilets on their properties.
  • 2019 YTD I have saved multifamily property owners over $2 MILLION on their water/sewer bills coupled with reducing water consumption by just over 200 million gallons (that will fill 303 Olympic size swimming pools)
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