How to separate utilities between tenants??? Need help please

64 Replies

I own a triplex. I live in the main house up front which has its own water and electric meter. 

I have two small homes in the back that share a water and electric meter. How do I handle utilities for these homes since they share a meter?? Should I ask the two tenants to split the bills down the middle?? Who's name would the utilities be under? Do I put it in my name and have tenants pay me for the utilities? I'm so confused. 

Located in Houston tx

I'm dealing with the same situation now. Decided to add it into the rent and have one flat rate. Too much hassle to split the bill and play bill collector every month in my opinion. Curious on others techniques as well. 

@Account Closed splitting the meters isn't a cheap proposition, especially if the house shares circuits. Your talking a lot of rewiring and a hefty bill. Whats the roi on that? If for pure convenience, I cant see it being worth it unless you can split the units down and sell them individually in the future. 

I would take the average usage per the utility company, use that to determine what you think the monthly bill would be and then pad it some to account for using more than the average.

If you do not have the funds to separate the utility meters, then you have two options (which one is a PITA).

1. Each month when utility bills arrive separate the total by the number of tenants in each unit, then bill tenants.  This is your option if tenants are already in the unit with a lease in place or....

2. Call utility and get a 12 month average on both meters and add this amount to rent for new tenants or a new lease.  You will need to get a 12 month average each year so you are not paying a partial of their utilities.

Next time you purchase a rental make sure you have enough reserve funds to cover issues that are unforeseen.  Good Luck!

In light of they fact that they have no history your only option is to have the utilities in your name and bill the tenants each month by splitting the costs. If you do not do this you will end up losing money. Once you have a history established over a couple of years you can then add it to the rent (plus a premium) for new tenants.

No other option, aside from separate meters, will work in your case. You should look into the cost of separate meters in the future.

What happens if a tenant claims they didn't use that much? 

One of my rear homes is about 470 sq ft and the other is about 750 sq ft. How can I split the bills evenly? Should it be 50/50 or 60/40? 

I do foresee some issues with doing this.. especially if one tenant goes out of town for a few days and doesn't use as much electricity 

Depends on the type of tenants you have.

I had a co-worker who's somewhat a jerk. His landlord is similarly stupid. Cooking gas bills nowadays run about $20.00/month. He shares a gas meter with his landlord and the LL bills him 50% what's on the bill. And I hear him constantly bitching about various meals the LL cooks, the number of people living there, the guests coming etc. This compares to his simple life with his wife where they did little cooking. Says he complains about it to his LL.

So I asked him how much rents he pays, and he tells me $700.00. I know at the time rents run around $700 to $750.00 for his type of apartment. So one day I said, if the LL charges you $725/month including gas, it would save you the trouble of spying on him, counting the number of guests he has. He said, you're probably right.

My takes is I had rentals that does not have it's own utility meters, I told the tenants it's included in the rent, and just watch what you use. Saves all the trouble of billing them separately, following up on it, and arguing about it with the tenants.

I just bought a duplex with the same problem, the previous owner had the tenants adding $50.00 to the rent each month to cover the water bill and had it billed to himself. I find this stupid because the utility company told me the average spent is $175.00 which is also an insane amount of water. 

One of the duplex sides has 2 adults and 3 kids living in it and the other has 2 adults and 1 child so it's not fair to split the bill down the middle. I am just waiting out the leases to the end then putting up another water meter, that way new tenants will have a good set up, old tenants won't refuse to pay me bc of the clear increase in billing and the re sale value of my duplex will be better when I do decide to sell.

You'll never win with the tenants because they'll always argue they owe you less for utilities. 

@Ilona Davidovich I don't think it will be as simple as just putting up another water meter. Someone correct me if I'm wrong, but I believe you would need separate water service to each unit. Aka separate water taps, separate water lines, and completely separate plumbing. Thats not going to be cheap or simple..

for all those wondering I got a quote to do separate water meter and electric meter. It's not as simple as installing a "meter". You have to hire an electrician to rewire the whole house so the other unit has completely separate breaker box and electric lines. The cost to do this was quoted at $8,000

For water, you neeed completely separate new water sewer lines. They will have to dig if necessary, cost was quoted at $6,000 to do separate water meter with new lines. 

It's not cheap at all. 

What do you guys think of submetering?? Does anyone have any experience with this?

Originally posted by @Kyle Doney :

@Ilona Davidovich I don't think it will be as simple as just putting up another water meter. Someone correct me if I'm wrong, but I believe you would need separate water service to each unit. Aka separate water taps, separate water lines, and completely separate plumbing. Thats not going to be cheap or simple..

I agreed, it's not simple.

Where I am, zoning rules restrict the number of meters already to prevent the proliferation of illegal rental units. In others words, if you decide to subdivide into five illegal units, you can't call up and say "give me 4 more meters". That's aside from the issue of piping and wiring

Plus, there's another issue that people don't consider. When my co-worker was complaining about the landlord splitting the gas bill with him, he said "all you need is another meter". Even if one can be installed, around here, each gas bill contains a fixed charge per month for having the service. So you were to go on vacation for 2 months, there'll still be a gas bill. Same for electric.

I told my co-worker a typical bill of $20.00 for cooking gas actually consists of a month charge of around $13.00 for having gas service and $7.00 for the gas. His landlord has a gas bill of $40.00/month, which consists of the same $13.00 service charge and use of $27.00 worth of gas. If  they get another meter, add the service charge in for the added meter, he's no better off than just splitting the gas bill. 

I know about this issue as I been discussing this with tenants over the years.

Originally posted by @Mike V.:

how has it worked out over the years?? 

 Over the years, I tell tenants to take it easy on using utilities, especially like AC in the summer. I don't have tenants watering lawns at rental apartments. So far, worked out fine.

Funny, I have a unit I used myself as an office that has a separate electric meter. Due to health issues, the unit's been vacant, but I still get a $20.00/month bill. Got a letter from the utility asking if something is wrong with the meter. I called them back, told them nothing wrong with the meter, problem is with me. So the service charge per month runs about $20.00.

I'm a new member to BP who happens to be an electrical contractor by trade although I work for a company right now and the company uses my license to do a small contract at LAX. That said there's a device called a Emon Demon and it's basically a Device you install between the main panel and the tenants sub panels that shows you what each electrical sub panel is drawing in terms of voltage and amp hours, I believe they even make some that will send you a email so you know who's using what power and itemize it on a spreadsheet, you can use that for billing purposes.

@Kyle Doney @Mike V. I already have two seperate electric meters and boxes. I was speaking to a fellow investor recently who said he did it for under $1,000 but this was in Lehigh Acres so the costs could be a lot lower in that area. 

I need to inquire in my specific area before making assumptions. 

@Mike V.

Contact these folks. They will split your bill for you depending on how many people in each apartment. Simple and easy.

It's called 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.]

The bill will be sent to you. You then send the bill to the company for a breakdown. They then send the split bill to your tenants who pay you directly.

Luckily for you, they have it specifically tailored for your city. Since you're not looking to add a meter or sub-meter, I would go for the simpler bill splitting option.  Good luck!

For what it's worth, you can buy water meters for between 55.00 and 100.00, depending on plastic or brass. From there you would have to separate water pipes. This may be simple or complex, depending a number of factors: Basement? Units running from a trunk line to bathrooms, kitchen, etc.

The electric would be more involved, especially if the circuits were not separated, as has already been said. I have a duplex that had 1 meter, but two panels (1 feeding the other), so it was simple (after rerouting locations of drops because of window placements). I am glad I did it, saved me from the hassle every month.

I'm pretty sure it's illegal to split the bill up. It won't hold up in least as far as I know in my state. Your best bet would be to charge a utility fee on top of rent as a flat fee.  That way rent isn't so high.  Instead of being x it's y+$100 electric fee and $40 water fee.