RUBS for Apartment Building

13 Replies

OK, it's legal there I'm fairly certain. Few things to note about RUBS:

1. Can't be implemented in the middle of a lease, it generally requires a signed addendum.

2. Most 3rd party companies that do it require a service fee which for a property such as yours might be $5.00/mo added to the tenants "share" of the water costs.

3. If implemented properly it definitely boosts your bottom line (think about your water bill being reduced by 80% and do the math) but you have to make sure your tenants will go for it. You hear some stories about people not re-upping due to add'l payments. What you save in water won't mean anything if your units are vacant.

4. You can also consider doing a submetering of the property which generally runs $500/unit and will give an accurate reading of usage whereas RUBS is an estimate.

Effectively RUBS will not cost the owner anything to set up and a $5 service charge billed to the tenant?

How safe it for the RUBS company to hold and disburse the payments to the landlord?

Are they regulated, bonded or insured?

Yes to question #1.

All of the reputable ones that are apartment or real estate management association members (I will send you the names of a couple) are generally good to go. They set up a sub-account in your name and store the money there until monthly reimbursement is how it works. If you are on Appfolio I believe it's free to the tenant.

Karim,
we have RUB systems on all of our older multifamily assets. We love them! All of our newer assets have their own sub-metering systems (much better).

Good luck!

Originally posted by Karim Shah:
Thanks John, that'll be be great if you could send over the names. I appreciate it.

This is why I love BP!! Didn't even know such a service existed. I agree, separately metered is preferable, but if a building makes sense in every other way, good to know there's an option to mitigate the lack of separate meters. Very cool stuff!

Does anyone see any issue with doing it myself as opposed to using an outside company?  The property in question is only 3 units, so I imagine it'll be very manageable.

It's fairly easy to implement yourself.  It basically requires an excel spreadsheet and a lease addendum, both of which can be downloaded by googling "rubs utility"

What formula do you use to calculate? 

Originally posted by @Eric Claxton :

Karim,
we have RUB systems on all of our older multifamily assets. We love them! All of our newer assets have their own sub-metering systems (much better).

Good luck!

Originally posted by Karim Shah:
Thanks John, that'll be be great if you could send over the names. I appreciate it.

@Mario Brown

Here is the formula to calculate RUBS (Ratio Utility Billing System)

Each apartment is designated with an occupant factor. The allocation starts with a copy of the property’s utility bill using the dollar amount of the consumption period that is to be billed. A predetermined common area allowance percentage (determined by you, the owner) is deducted to give us the billable figure to allocate. This amount is divided by the grand total of each apartment’s designated occupant factor, multiplied by the apartment’s individual designated occupant factor. Below is an example of RUBS. This example may be used to allocate any utility such as water, sewer, gas or garbage.

Designated Occupant Factors:

1 person = 1.0 (1 person pays 100% of 1)
2 people = 1.6 (2 people pay 60% more than 1)
3 people = 1.9 (3 people pay 30% more than 2)
4 people = 2.2 (4 people pay 30% more than 3)
5 people = 2.5 (5 people pay 30% more than 4)
6 people = 2.8 (6 people pay 30% more than 5)

Your Property’s Utility Bill = $1,500.00
10% deduction for common area = $(150.00)
Total amount to allocate = $1,350.00

Property’s factored occupant total = 157.3

The allocation is figured: $1,350 / 157.3 = $8.58

1 person will pay $8.58 ($8.58 x 1)
2 people will pay $13.73 ($8.58 x 1.6)
3 people will pay $16.30 ($8.58 x 1.9)
4 people will pay $18.88 ($8.58 x 2.2)
5 people will pay $21.45 ($8.58 x 2.5)
6 people will pay $24.02 ($8.58 x 2.8)

A sample breakdown of a resident’s utility bill utilizing RUBS may be as follows:

Water: $8.58
Sewer:$18.52
Garbage:$10.60
Bill Fee: $3.95
TOTAL: $41.65