Ratio Utility Billing (RUBS)

5 Replies

Greetings BP!

I'm about to buy my first multi unit, and currently the owner pays gas, water, sewer, and trash.  Also, the building is in need of significant repair and current rents are $375 for an efficiency up to $575 for a 2 bedroom.  The utility company says gas usage peaks at over $300 in December. 

I'd first need to increase each rent by at least $50 (its also in an up and coming area), replace the roof and do some hopefully minor cosmetic updating.

For those of you who have acquired multi unit buildings with current tenants and one utility meter, have you had success with RUBS (ratio utility billing)?

All tenants are on month-to-month leases, so its possible that they'd all move out once I instituted the changes.

Any advice?

Thanks folks,

Erick

Erick, congrats on the purchase!  Regarding RUBS, this practice can be effective or ineffective based on your competition in the area around the property.  Get a good handle on what the market allow, and adjust accordingly.  You may meet with some strong tenant aversion to paying certain utilities if it is not common in your local area.  Hit Rentometer, Craigslist and your other common rental advertising methods in your local area to nail down the going rate on market rents, and what is/is not typically included for utilities.

Does anyone know if RUBS are common in Connecticut. I am in a similar situation as 

@Erick Caffarello was a few months back. I am in the process of purchasing a multi-family home where the current owner pays all utilities. I would to set each unit on a RUB to make the cashflow more consistent but I am unaware if this is common in the area, Hamden, CT. I currently own a SFH near by and the tenant pays all utilities there.

Thanks,

Marc

@Marc Knapp RUBS are not common in CT

Are you working with an agent on your multi-family transaction here in Connecticut? If so, this is something an experienced agent should be able to tell you pretty quickly. 

Michael,

Good information, thanks.

I did a quick call around about 6 months ago for my triplexes and they told me they would only do 20+ units. Anything smaller didn't make sense for them. I don't know if they changed the guidelines but the company I called was multi family utility company inc. you can google them. Good luck

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.