I found several old forums related to this but none that seem to answer mine and likely many other landlord's needs and I am hopeful that there is some newer technology that can provide a solution.
I have several smaller multi-family properties with split utilities but a common water meter (4-7 units). For one of my properties, the most recent bill equated to $283/unit/month in a building with average rent of $800/month. I suspect that it is 1 or 2 tenants in particular that have toilets running constantly and/or are just abusing the fact that they don't have to pay for water.
Are there any options for sub-metering the water bills to individual apartments?
These are old buildings so the plumbing is probably not a direct run from the basement, so I would ideally need to measure water in at the point of use. In most cases, they have separate hot water heaters, so I could just monitor how much hot water is used per apartment and take that % of the entire bill, this will not be exact so may cause other issues.
Any suggestions and ideally specific products for this or a company in South Jersey (Camden County) that does this would be great.
Contact the local utility and a plumber. ROI on submetering seems pretty easy in your case. Other option, RUBS.
RUBS is going to be your best option. Contact Guardian Water & Power, they will help you.
Submetering is not permitted in New Jersey for apartment building's built before August 28, 2011
Thanks Kurt and Chris -- really wanted to do something other than RUBS since I don't think it encourages tenants to conserve and can end up being unfair to some tenants who are but if that's the only option then that'll have to be what I do.
Chris, I sent in info to Guardian and I saw notes about submetering being illegal and then also something about only allowed for water. After posting this question, I also sent a note to my landlord/tenant attorney so I make sure that I don't waste time on options that I can't ultimately implement. I'll let you know if I find out anything useful.
I would first do inspections of the buildings to make sure there are no obvious leaks, running toilets, etc. Maybe implement coin operated washer and dryer as well if that’s feasible.
I second Darren's comment to do inspection and minor repairs. Replace all toilet flapper, faucet washers, etc. Maybe even low flow shower heads and aerators. It's crazy how much water a little drip will waste. We saved over $10k a year on our water bill at one property by doing shower heads and flapper replacements.
Darren thanks for input and we will be doing that. Plan is to replace all toilets and shower heads with low flow during tenant turnover but we might accelerate that process. But regardless, if I can find a way to easily measure and bill back for actual use, it'll prevent a lot of issues. If tenants are paying for it, I'm sure they will let us know when there is an issue.
Spoke with my attorney and I cannot do RUBS but I can bill back for what I am able to measure. All of the meters that I've found require a single main supply to the apartment and plumbing in these old buildings is not so simple and re-plumbing it would not be easy. Do small point of use meters exist where I could install at every fixture? Even without over-use bills are $800+ per year per apartment so for my 6-unit, It could still save me $5k/year.
Here its saying submetering in NJ is illegal for profit. The term is check metering there and looks legal. (From a vendor site so further investigation needed)
@Dan Bosak : there are companies that specialize in sub-metering apartment buildings. Just google for "apartment water submeter Philadelphia" and start calling. :)
They usually have a couple of general business models: either smaller up-front-fee for the meter installation with a recurring fee for reading and billing, or a one-time charge for installation, and reading/billing is up to you.
as already mentioned, it's actually illegal to sub-meter at a profit in some jurisdictions. Another consideration is that often-times the landlord is still on the hook for the water-bill even if a bill is sent to the tenant. Depending on the type of tenants, they may be less likely to pay a water bill from a random 3rd party company, especially after they discover there is really no recourse.
A more effective strategy would be to include the water line-item on the monthly rent bill, so it's very apparent it's going to the land-lord, and there is as much expectation that they pay that line-item as there is to pay the rent. However, depending on the local laws, you may not be able to evict based on a refusal to pay the water. So, keep in mind that even if you are able to measure, you may still not be able to collect. You know your tenant best, so you can make that prediction.
I hope that helps and please report back on what you find!
@Dan Bosak full disclosure to start, I own a submetering company but am also a RE investor and have done both RUBS and submetering prior to owning the company. Wanted to chime in mainly in response with what @James Kojo mentioned above. He is absolutely right! Tenants are much more likely to pay the utility payments to you, landlord or property manager as they do rent. We offer both options where tenant can pay us or pay you but there seems to be a lot more late payers, non payers and just general chasing people to pay when they pay a third party. Highly recommend that they pay you as they do rent.
Finally, as for laws, every state is different but I think you received great advice already from your attorney. Most every state allows submetering, some are more strict than others such as CA, but all require that you cannot profit from it. What they mean by profit from it is charge above and beyond what the local municipality/utility charges. If you charge more then you become a utility provider in itself. If you charge the same or less you are not profiting from it, just passing the costs on.
Options to Sub-meter Water in a Multi-family building
The primary reason why an owner sub-meters their Multi-family property: Based on our 20 + years of sub metering experience throughout the US, …Unlike RUBs (charging water/sewer based on hot water ratio consumption, occupants, fixtures or size of the home) were the conservation factor is often short lived ; The tenants’ water/sewer usage will drop by 25 to 35% when the tenants are responsible for their own water use; As an owner you will be promoting water conservation and working with your residents to mitigate future rental increases, as the water/sewer costs are no longer a rental component.
We’re here to answer your water sub-metering questions.
My apologies for the ignorance
But what is RUBS
@Derek Persuit I currently own a 4 unit MFR that has individual meters for each unit for water and electric but I'm looking into purchasing another 4 unit MFR but it happens to have a master meter for water. That's why I'm learning about the differences between sub-metering or instituting RUBS.
A ratio utility billing system or RUBS billing is a method of calculating a resident's utility bill based on occupancy, apartment square footage, number of beds, or some combination of factors.
Using RUBS to bill residents for water, gas and/or electricity expenses has several advantages including:
- Requires no capital investment to get started
- Enables owners to recoup a large portion of the overall utility expense
- Can be implemented quickly
- Immediately improves cash flow.
I borrowed this example from
"Easy Example: Say we manage a 2 family with 6 tenants/residents in total: 4 people living upstairs in Unit 2, and 2 people living downstairs in Unit 1:
If January's water bill for the whole building is $100, then
- February's Rent for Top Floor Unit 2 would have an extra $100 x 4/6th (or 2/3 rds) added on = $66.66
- February's Rent for Bottom Floor Unit 1 would have an extra $100 x 2/6th (or 1/3 rds) added on = $33.33
I always send each Tenant a copy of the entire building's Water bill, plus a cover page with a detailed explanation of the billing-breakdown."
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