I am buying my first multi-unit property; a 4 plex in Texas. There is only 1 water meter for the whole place, so the previous landlord has been paying the water bill. Water bill is about $150-$200 a month. Going forward, I do not want to pay the water bill. Any ideas on what would work best for this situation? Would I just make the property manager split the water bill between the 4 units (perhaps based on square footage)? Is there some device I could buy that separately meters the water usage? Should I charge a flat- fee for water? Just raise the rent? Would really appreciate your thoughts on this!
From my understanding you can charge a flat water / sewer fee in addition to your rent on the next lease( check local laws/attorney ) or just roll it into the rent itself and continue to pay the bill. What I have heard is it will not pay to put in new meters and have the tenants pay it themselves directly.
@Rita Merlo find out if your competition in your area are doing a utility bill-back. If so, implement one yourself. If it is the case, give them notice, and if they start to call on the competition, they’ll find out that it is standard and they’ll stay put. It also has a green effect, because they will start using less water, once they find out that they are paying for it. If you just plan on raising the rents, again see where your competition is. You don’t want to set the bar for being the highest rent among the comps. If anything you want to be in the middle of the pack.
@Rita Merlo there is a bigger pockets episode where the guest has a company come in and “meter” each unit. You pay the city water bill, the tenants get a bill from the installation company to pay their share. The install company gives you the money. If the tenant doesn’t pay, their water gets shut off but the other tenants remain in harmed.
WOW! Thank you all for such amazing advice. I really appreciate this feedback.
Yes, you can do any of the above but the best choice will depend on the local laws and costs involved.
Check the local tenant-landlord laws before turning off any utilities. I would not do that.
Depending on the local laws, you can charge a flat fee or you can divide the monthly bills every month based on square footage.
reach out to your local apartment association. ask them what the laws are in your area regarding billing back of the water.
some states and cities have very staunch rules about billing back.
call around the competition and see what they are doing. if they are billing back then you will be bale to as well just need to know how much if it can you recapture.
make sure in your renewal leases, you have a clause in there that states that resident is required to pay water and what the fee for that is..
Call your local multifamily housing association, become a member, and ask for some advice specific to your area. Billing back is the easiest, but has the lowest return. Separately metering is the most expensive but most effective long-term.
Thank you for sharing these thoughts! Really appreciate it.