RUBS - Starting point

6 Replies

Hey friends. Couple main questions. 

#1. I am in Norfolk Virginia looking at a 10 unit. Currently Owner pays electric and water. Is the best place to start looking into RUBS, the local waterworks department? 

#2. Is there a general rule of thumbs for either the size of the owner paid water bill, or number of units that makes it "worth it? I currently own a 6 unit that I would love to collect water payments from the tenants. I just don't know if it would be worth it. I've heard it only works well at scale. 

Thanks!

Not entirely sure, but the simpler option is just to increase rents on the tenants. We did that with a building that I bought. Heat was combined for 5 units. I just told the tenants as their lease renewals came up that their rent is going up $50/month to account for heat being included.

Water I believe just goes by how many occupants are in each unit. But if you have common area water (laundry units) then that confuses things a bit. You may want to just look into sub-metering though. 

@Jonathan Beasley Your options are limited by a few factors:

  • Is it legally permissible to implement a RUBS program in your market?
  • What are your competitor doing?
  • How much rent upside do you have?

There is no general rule of thumb because everything is driven by market dynamics and competition. You are SOL if there is little room for rent upside or your competitors are not implementing a RUBS program.

@Anthony Angotti - Good advice. I may just see if it is reasonable to sub-meter, particularly on the new purchase since we are still in the feasibility/negotiation period. Good stuff. Thanks man!

@Omar Khan - probably 50-65bucks a unit on the 10 unit we have under contract. The cool thing is there isn't a TON of rental property available, and it is a military town. So people are constantly coming in that need to stay somewhere for 2-3yrs. As far as legality, I don't actually know. I think I'm going to make a trip to waterworks to ask some questions. Any tips on how to do some spying on the competition to see if theyre doing RUBS? Thanks !!

@Jonathan Beasley There are plenty of options out there to submeter, some are expensive and don't make sense unless you scale, others can work on something as small as a duplex. Some of the biggest factors are what type of meter the company big selling, can the municipality install their own meters (this is the best), is plumbing separated, how expensive is your water/sewer. I see comments from VA and PA, those seem to have relatively high water and sewer fees so it make make sense and a fast ROI on smaller properties.

Originally posted by @Jonathan Beasley :

@Anthony Angotti - Good advice. I may just see if it is reasonable to sub-meter, particularly on the new purchase since we are still in the feasibility/negotiation period. Good stuff. Thanks man!

@Omar Khan - probably 50-65bucks a unit on the 10 unit we have under contract. The cool thing is there isn't a TON of rental property available, and it is a military town. So people are constantly coming in that need to stay somewhere for 2-3yrs. As far as legality, I don't actually know. I think I'm going to make a trip to waterworks to ask some questions. Any tips on how to do some spying on the competition to see if theyre doing RUBS? Thanks !!

You don't need to spy, you can just ask if the building is all bills paid or if you'll have to pay for utilities yourself.

@Jonathan Beasley   HRSD does most of the billing around Hampton Roads.  You can set up your own meters and back bill the tenants.  I just put in my first.  I have done flat fees for water/sewer/trash but this is my attempt to change wasteful behavior