Hello BiggerPockets community. I am about to close on a property in the Sacramento area. I will be living in the front unit and renting out the back two units. The tenants already living there are willing to stay. My question is about the water bill. Right now the tenants only pay electricity and gas, the old landlord paid the water bill. I called the water company and the property is on a master meter not individual. The average water bill on the property was $300-$330. I want to start charging a flat water fee to my tenants. I’m unsure on an amount. So my question is to any landlords in the Sacramento area that have properties with a master meter. Are you charging a flat water fee? Is so, how much are you charging?
I own a 2 unit property in Modesto (2 homes on one lot). I just added a flat water fee to the front unitunit (2bd) of $50/month and intend to add a $25/month flat fee to the back unit (1bd) upon lease renewal. In my case it is not typical to live in a Modesto home and not pay a water bill. My monthly water bill for both units is $100+ and there is no way to determine usage since they are on one meter. I simply picked a dollar amount that totaled less than my monthly bill. Is it possible to install separate meters? That would be ideal.
If you have an average water bill amount, you can prorate and sort of divide up the bill based on a variety of methods.
I have seen some use the number of occupants in each unit, which assumes two people use twice the water as one.
I have seen some use the unit's square footage, so a 1000 SF unit would pay twice the water a 500 SF unit.
I have also seen some use the number of bathrooms. So a 2 BR 2 BATH would pay twice the water usage of a 2 BR 1 BATH.
You also need to take into account the common usages, like washing machines, car washes, lawn sprinklers.
I would just pick a method that seems most fair and work out the flat fee from that.
Curious, is there any advantage to charge a flat water fee of $25 instead of just increasing the rent by $25 and say water is included?
Are the tenants more receptive to paying a "water fee" but not if their rent is higher?
Or are you considering the water fee as part of operating expenses and not income?
@BrianG Thanks for the reply. Both the units are a one bedroom. I feel that a water bill is pretty typical in all of California. I will just have to pick a dollar amount and stick with it. Thanks for the information.
@Sam Leon Thanks for the reply. You have me some ideas to think about. Well I plan on increasing the rent and say that water is included in the rent. I am looking at the fee as a way to cut down my water expense and not increase my income.
It might be wise to see what the rules are in your state/town about charging tenants for water usage. Because you plan to include it with rent, it's not as important.
We manage properties in Vermont and in the city of Burlington, tenants cannot be charged for water usage unless each unit is separately metered. Across the river in Winooski, tenants can be charged for water usage even if it isn't separately metered as long as the lease states clearly how the charges are divided up amongst the units.
Best of luck!
Please check with your city.
I have a duplex sharing one water meter in Oakland. City of Oakland is not allowed me to bill the tenants for water even if I install the sub meters. @Ashley Wishinski is right on the spot. Also California is famous for rules and regulations compliance.
I checked with Santa Clara County Weights and Measures about 4 years ago for the same reason and they stated there was no problem or need to comply/register/etc. to sub-meter tenants from their perspective. I don't have property in a rent controlled area. Remember to dive up the sewer expense as well! I'm slowly moving things over to where I could separately sub-meter the irrigation and the units individually. Meters are not that expensive and are the fairest way to go.
This is all good advise. I will have to check with the city of Sacramento. I will also have to look into sub-metering and how much that will cost me. I want to be as fair as possible. Thank you for all the great information.