North Hollywood, CA · Member since 2012 · 34 posts · 3 votes
Wondering if anyone has any input on implementing RUBS for their property. I'm soon to close escrow on a 45 unit building in Central California (Bakersfield) and of course I'm looking to reduce expenses so I'm considering RUBS. Any feedback/advice much appreciated.
@Gustavo Gonzalez. I can't speak for the Bakersfield market you are in, but if comps are charging back, you should, too. It is a no-brainer way to improve the value of the property. You can implement it with renewals or new tenants. Depending on what percentage your comps are charging back, you can gradually charge back over time. Be sure to check on the limitations on rent vs other income increases on multifamily owners in CA.
What year was the property built?
In CA, properties built after 1/1/18 require sub meters to bill back water and sewer to tenants.
Electricity can not be billed back via RUBs in CA, but you “could/should” be able to go after tenant reimbursement for water, sewer, and trash. As someone stated, my personal recommendation would be to include a common area reduction so residents aren’t hit with the full irrigation expenses in such a dry climate.
Rental Property Investor · Coral Gables, FL · Member since 2016 · 199 posts · 266 votes
5y
@Gustavo Gonzalez. I can't speak for the Bakersfield market you are in, but if comps are charging back, you should, too. It is a no-brainer way to improve the value of the property. You can implement it with renewals or new tenants. Depending on what percentage your comps are charging back, you can gradually charge back over time. Be sure to check on the limitations on rent vs other income increases on multifamily owners in CA.
@Gustavo Gonzalez. I can't speak for the Bakersfield market you are in, but if comps are charging back, you should, too. It is a no-brainer way to improve the value of the property. You can implement it with renewals or new tenants. Depending on what percentage your comps are charging back, you can gradually charge back over time. Be sure to check on the limitations on rent vs other income increases on multifamily owners in CA.
What year was the property built?
In CA, properties built after 1/1/18 require sub meters to bill back water and sewer to tenants.
Electricity can not be billed back via RUBs in CA, but you “could/should” be able to go after tenant reimbursement for water, sewer, and trash. As someone stated, my personal recommendation would be to include a common area reduction so residents aren’t hit with the full irrigation expenses in such a dry climate.
Rental Property Investor · Redondo Beach, CA · Member since 2017 · 411 posts · 477 votes
5y
@Gustavo Gonzalez rubs is a great way to add value, but as Stony points out, find out whether it is standard in your market. If it is, don't set the bar on what to charge. Try to come in halfway among the comps, just like you would with the rent.
Real Estate Broker · San Jose, Dublin CA and Florida · Member since 2017 · 165 posts · 48 votes
5y
Some tenants may feel it’s unfair and doesn’t give them incentive to save since they get charged whether they use it or not. With climate change etc especially in dry areas like Bakersfield, it is best to install individual metering if you can. It will increase the resale value as well. This May not be just for profit, it’s also to be a good world citizen.
Investor · Bakersfield, CA · Member since 2015 · 483 posts · 234 votes
5y
@Gustavo Gonzalez - I would say that it depends on what you have going right now. If the power and gas are not separately metered then it is definitely important to do some kind of utility bill back system. Lowering expenses, and increasing income is going to lead to value increase in your property especially since it is commercial multifamily, so really any kind of optimization that you can do should be welcomed. There are also different systems than RUBS that can be implemented, and often times can be easier, but will depend on other factors, as well as to how easily or cheaply these systems can be implemented and whether than is an option that you will want to explore. Feel free to PM me as well!
@Gustavo Gonzalez - I would say that it depends on what you have going right now. If the power and gas are not separately metered then it is definitely important to do some kind of utility bill back system. Lowering expenses, and increasing income is going to lead to value increase in your property especially since it is commercial multifamily, so really any kind of optimization that you can do should be welcomed. There are also different systems than RUBS that can be implemented, and often times can be easier, but will depend on other factors, as well as to how easily or cheaply these systems can be implemented and whether than is an option that you will want to explore. Feel free to PM me as well!
Congrats on your building.
Best Sunny
I would highly recommend reading California Public Utilities Code 739.5 before pursuing any electric or gas bill back.
Some tenants may feel it’s unfair and doesn’t give them incentive to save since they get charged whether they use it or not. With climate change etc especially in dry areas like Bakersfield, it is best to install individual metering if you can. It will increase the resale value as well. This May not be just for profit, it’s also to be a good world citizen.
If tenants aren't charged at all, then there is absolutely no incentive to save. Better to have some incentive, even if small, IMO. But I don't know the Bakersfield market.
@Gustavo Gonzalez - I would say that it depends on what you have going right now. If the power and gas are not separately metered then it is definitely important to do some kind of utility bill back system. Lowering expenses, and increasing income is going to lead to value increase in your property especially since it is commercial multifamily, so really any kind of optimization that you can do should be welcomed. There are also different systems than RUBS that can be implemented, and often times can be easier, but will depend on other factors, as well as to how easily or cheaply these systems can be implemented and whether than is an option that you will want to explore. Feel free to PM me as well!
Congrats on your building.
Best Sunny
I would highly recommend reading California Public Utilities Code 739.5 before pursuing any electric or gas bill back.
Hi Chris! I am a little late to this chat, but had a follow up question. I read CPUC 739.5 (among others) and cannot find anything that prohibits RUBs for electricity and gas bill back. Is there a specific portion, or other code that you learned this from?
Section (a): ..."the master-meter customer shall charge each user of the service at the same rate that would be appicable if the user were receiving gas or electricity, or both, directly from the gas or electrical cooperation."
The only way to bill the tenant at the "same rate" as if they had their own electric or gas account would be to install submeters and use submetered billing using "Utility Rates" as the methodology. Therefore, RUBs (Ratio Utility Billing System) is not allowed since it does not use actual consumption and instead uses a variable such as; occupants, square footage, etc to calculate charges.
For background, this is what I do for my career with California being one of my primary markets. PM me if there are any other questions I can help with.