Multi-Family Home and no separated meters!?

Question

Hello fellow BP Investor and friends.  When Multi family homes (mainly a duplex from what I’ve been running into) doesn’t have separate meters (gas, elextric, etc...) how is it that both tenants pay for their fair share?  How is it divided with one meter?

Would you go ahead and pay to add the separate meter? Or would you just avoid the property all in all if you didn’t have the money to separate that specific utility?

Thanks guys

Nancy DeSocio · Answer

Hi @Obed Bermudez ,

I wouldn't avoid it altogether, but if you include that expense when you analyze the property, it could still work.

You can pay the utilities as the landlord and include that cost in the monthly rent.  Tenants don't like bills just as much as you don't, so if you offer an "all inclusive" rent that accounts for the utility usage, it could work in your favor.

Good luck on your journey!

Steven Pool · Answer

@Obed Bermudez

I'm going through this right now in Wisconsin with a duplex.

I spoke with the utility company and they said it was pretty common and there weren't any fees associated from their end.

The city has their normal building permits that are required for pretty much everything but these are included in the contractors quotes.

For me to split the water it would be about $2600

For me to split the electric it would be $1700

Considering the average monthly utility bill (they're both wrapped up in one bill) is $350, I would recover my costs pretty quickly once I transfer the costs to the tenants. I plan on knocking their rent down by about$150 to offset it.

Marcus Auerbach · Answer

The reason why some of our "duplexes" are not seperatley metered, is because they were built as a single family and at some point devided.

1.) The issue is that often there is only one heater and only one duct work system. Adding a 2nd heater with it's own supply and return duct work is usually very costly, as you have to cut a lot of drywall on both floors.

2.) Electrical and plumbing will be similar, you may have to rewire repipe the house to achieve true seperation between both units.

3.) The third issue are the stairs. The upper unit usually does not have acceptable access, wide enough for furniture.

Jennifer Rysdam · Answer

Get bids to see how much it would cost to split it. I have an 8 Plex and the water and sewer are all together, so I pay it. They pay their own electricity, which is heat and electric for their unit.

The other thought is that many renters like having all of their bills be an exact number every month, so that might be a selling point. to have utilities included.

Randall Weatherall · Answer

I would get with your local municipality/utility companies and get a quick quote to split or tack on a set amount extra to rent and rent them with utilities paid.  From a resale standpoint, however, buyers always prefer a split.

Kurt Jones · Answer

Lots of people on this thread will say just go ahead and split it. Recently I looked at doing just that and honestly it was incredibly expensive to do so. With all of the permits, work orders and nonsense that the city wanted done, it was going to take me years to recoup the investment. Easy solution was to add a “water surcharge” to that unit.

Justin Tahilramani · Answer

I recently developed a purpose built duplex (1bd/1ba each side) for use as a Short Term Rental. The duplex has one electric service, one septic, and two water meters (each dwelling unit is required to have a sep. water meter in my area.

I built it this way on purpose because an extra electric meter has a monthly base rate of $35 and an additional septic would have added $4k to development costs. I pay for all utilities anyways since its a STR.

Nancy makes a great point - get an idea of the average utility costs and offer an "all inclusive" rent rate. Or - just pay to have the units re-wired/metered.

Adam Apalategui · Answer

If reasonable cost I would add the meter.

In Bend Oregon the city will not add a second water meter, if one tax lot, so owner needs to pay it or split. And there are rules about how it can be split of course...and there are sometimes disagreements between tenants so I just include it...

Taylor Roeling · Answer

@Obed Bermudez Adding and paying for the separate meter seems like the best way to go to avoid future conflicts with your tenants arguing or getting mad at you. If the cost is reasonable I would say it's better to be safe than sorry - also, if the duplex is great in all other aspects then it is probably worth it as well!

Bryan Mitchell · Answer

I like the surcharge option. I’ll be adding those to some of my cottages.

Multi-Family Home and no separated meters!?

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