This question is posed to multifamily operators and managers of larger apartment buildings that have recently implemented RUBS through a 3rd party vendor.
In your experience, what percentage of your utilities were you able to recover from RUBS? I know each state's RUB calculation varies but I'm just trying to get a general ballpark.
For example: If current utility bill for entire property is $100k for month, were you able to recover at least 60% from tenants?
Also - how did the RUBS implementation effect overall usage once tenants were liable for their utilities? I talked to some operators and they said that their water usage immediately dropped by 30%
We recover approximately 65-70% of the costs.
Thanks for the feedback and good to know the data
We routinely recoup about 95% of utilities in the areas that the market comps allow us to charge back utilities. Some markets we cannot do that because the competition will not and we will lose occupancy to them. The calculations are not standard by state, but there are customary calculations in most areas (sqft vs occupant, etc). A good billing company will have a legal department that will review your setup and keep you out of trouble.
We also recoup trash costs, pest control, etc. at about a 95% recovery rate. Placing the costs back on the tenants will definitely help reduce usage. Once they are on the hook for the bill, they tend to not want to waste it. Amazing how that works out. Don't be afraid to try it, and if your comps are not doing it yet, you can always test the market with a flat fee added to your lease charge and see how far you can push it. You might just lead the market and your comps will jump on board and charge their tenants too.
Side note....if you accept section 8 housing subsidy, you make not be able to use RUBS or a flat fee. Check with the housing office on how they operate.
I have water submetering, which you think would be better than RUBS but I've still only been recovering about 60%. Now, this is a current rehab & stabilize project not an established property, so it's a matter of educating the new tenants as they move in that they really DO have include that water bill payment with their rent, LOL. And trying to change the habits of the inherited tenants, many of whom have ignored those water bills for years. I'm hoping we'll be able to build up to at least 80% in time. It would be great to be fully reimbursed, but I don't think I can plan on it.
A friend of mine that has a 130 unit gets about 75% to pay, 10% more after collection, and the other 15% he eats rather than evict and spend thousands per units and lost rent to get ready again.
If those types of systems are present he just builds it into his offering number and counts on certain non-collectible losses.
We bill rubs at 90%, as a general rule. Some states have laws restricting RUBS from being income generating for landlords, so to be on the safe side we simply bill at 90% per property. Now collections? Well that goes along with the collection rate of rent. So actual comes in closer to 80%.
On the collections note, you should always have any tenant payments applied to everything else charged on their ledger first and rent last. This way if you have to take them to an eviction proceeding for non-payment, it is for rent and not utilities, which many judges like to toss aside. They can't toss aside missing rent though. @Jean Bolger If you do this and then evict one or two immediately, word gets around quick and the rest step into line.
@Mike B. Mike, thanking you again a year later. I did look into what you said about applying the tenant payments to everything else on the ledger first. Unfortunately this wouldn't hold in a court of law in California. However, I can always try it and re-adjust the ledger as a threat to the tenant and deal with with the ledger later if I have to evict and go to court, hoping that it doesn't have to go that far.
My problem is that I have a large complex and I don't want word getting around that tenants can avoid paying the RUBS without recourse.
RUBS is specific to each market. We are able to bill around $35 per unit in our market. We need to be sensitive to what other operators are charging. We were using NWP as third party billing, but decided to bill in house once we hit a certain size
@Gino Barbaro Do you guys bill a flat rate or do you use a variable RUBS calculation? We've had trouble collecting using a third party RUBS system. We're thinking about going to a flat rate and keeping it in house.
We started out with NWP and had problems collecting when tenants left.
We are doing in house and depending on location in the city we charge a flat fee for one and two beds
It depends on our market. Our market does flat rates
@Gino Barbaro How do you determine the flat rate fee? Is it based on the market comps? Are there any restrictions in your markets on charging more than what you are charged for the utilities?
there are a couple of videos in the manage right that we discuss RUBS. You can not bill back for more than you collect. We bill back for water, sewer and garbage.
Fees are based on what the market is allowing, around 30-40 for 1 beds, and 40-50 for two beds, depending on the asset class and what the competition is doing.
Jump on Apartments.com to see what your neighbors are charging
Have a Happy Memorial Day
Join the Largest Real Estate Investing Community
Basic membership is free, forever.