Houston, TX · Member since 2017 · 49 posts · 15 votes
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.
Flipper/Rehabber · Golden, CO · Member since 2013 · 590 posts · 319 votes
9y
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.
I recently saw a post on here explaining how to separate pricing of electricity between tenants. It was some kind of apparatus that digitally showed amounts in parts of the house???? Need help desperately please!?? I cannot afford separate meters for an area above the garage I will be renting out soon. It is huge with over a 25 foot ceiling. Looks like a barn and is above an attached almost 4 car garage. Thanks for any help!
Waipahu, HI · Member since 2018 · 121 posts · 81 votes
7y
When I look analyze properties I usually shy away from multifamily that are not separately metered. It just seems too stressful of a proposition to deal with.
Property Manager · Edmond, OK · Member since 2019 · 20 posts · 21 votes
6y
Checking for a meter on each unit is the first thing I look for on any multifamily property. If you're not careful, you as the landlord could get stuck with the bill which could diminish all cash flow. Make it a habit to only entertain certain properties that have their own meter and it will make life much easier. Also, trying to convert a property with only one meter to multiple meters is just too time-consuming and expensive anyway. There are enough things to think about in real estate, splitting the electric bill between multiple people doesn't have to be one of them.
However, if you're in a situation where each room in a unit is rented out individually, all the tenants should split the cost equally among themselves because they all share the common rooms, kitchen, etc.
Rental Property Investor · Member since 2018 · 34 posts · 25 votes
6y
@Lee V.
The duplex I own has all shared meters, water,electric and gas all in my name. I actually like the fact that they are in my name as I can make sure that all of the bills are current and not shut off causing problems in my property. Having the water usage in my name would also clue me in if there was a leak that the tenants didnt tell me about as usage would be higher.
I have it written in my lease that I pay all utilities up to reasonable average usage. When I purchased the property I got 2 years of past bills for all utilities to get a baseline on cost and keep them all in a spreadsheet monthly to track monthly averages. Using that info I can budget that cost as I do mortgage or insurance. My gas and electric are auto bill payments so I get an email when its available and when its paid but I do no work. My water i pay by check because the city charges for online payment. So my utilities take me all of about 2 min a month to make sure they are current and functioning properly.
I know you said they are new units so a baseline would be impossible but after a year you would have a good idea of cost that you could incorporate in your rental fee. For now you could get estimates on cost based on square footage and make an adjustment next year.
Investor · Johns Creek, GA · Member since 2017 · 463 posts · 488 votes
6y
It might be the easiest to just add everything to the rent. There might be legal repercussions if you try to submeter or implement RUBS. At least that's the case with mobile home parks where I am. I'm thinking it would be very similar for triplexes as well.
Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
6y
I owned older triplexes, and it comes with one furnace, hot water tanks, and electric meters for the common areas. It would be a nightmare to separate them to each unit. As to usage, the fairest allocation method would be the number of tenants. I was a tenant once, had a job traveling on assignment, with next door neighbors families of four. It would be grossly unfair if it's a duplex, the landlord allocates me half. Yet on the other hand, I seen tenants with friends staying over for sleepovers. So the number of people in the unit doesn't seem to be a fair way of allocating either.
Then I saw new triplexes built this past year in my neighborhood. They have three furnaces. three hot water tanks in the basement. It's built so utilities can be allocated. I own such properties, the older ones, and I utilize service contracts for heating, hot water tanks, particularly hot water tanks, because when they go, every eight or ten years, now cost $1,500 to have a new one installed and the old one hauled away. The service contract runs several hundred a year. With 3 of each, am I to get three service contracts? Around here, they run $500 to $700 a year. Do I stick tenants with it, and require they have contracts? Now every 8 or 10 years I got 3 water tanks to replace, and no tenant will pay $1500 to replace a hot water tank for you.
So when it comes to allocating utilities, having multiple furnace, hot water tanks, etc. seems the way to go, till you analyze the implementation, and it's expense for the tenant, and uncompetitive, as very few rental units in the area is built this way. Costs thousand a year in additional expenses to maintain.
Rental Property Investor · California, CA · Member since 2018 · 50 posts · 14 votes
6y
Id strongly suggest that you invest in upgrading the electric to separate the meters. I just went through this process. It wasn't easy or cheap ($3k) but in the end it will be less of a hassle.
Id strongly suggest that you invest in upgrading the electric to separate the meters. I just went through this process. It wasn't easy or cheap ($3k) but in the end it will be less of a hassle.
Where I am, the unit must have a proper C/O. People convert basements, garages, attics into illegal rentals units, and the utility will not provide a meter to a unit without a CO. The municipality thus put brakes on illegal units, at least that's what they think. I know as I tried.
A co-worker whose dad rents to college students at nearby colleges would photocopy the electric bill, divide it by the number of tenants on a particular meter, and submits the bill to each student tenant. So I said "sounds like lots of work". He laughed and said his dad adds a handling charge of $10.00 per bill. Has a number of rooming houses, around 20 to 30 students, at $10.00 per student, collects over $3,500 a year in handling fees. It's about an hour of work per month for $300/month. Not bad for a hassle. Sounds a lot better than spending $3,000 on an electrician, and going through the trouble of getting CO's.
Bottom line, if you can't do it the "no hassle" way, do it the hard way and make a few bucks out of it. I was surprised the student tenant's didn't complain, as their parents probably paid for housing and tuition.
Id strongly suggest that you invest in upgrading the electric to separate the meters. I just went through this process. It wasn't easy or cheap ($3k) but in the end it will be less of a hassle.
Where I am, the unit must have a proper C/O. People convert basements, garages, attics into illegal rentals units, and the utility will not provide a meter to a unit without a CO. The municipality thus put brakes on illegal units, at least that's what they think. I know as I tried.
A co-worker whose dad rents to college students at nearby colleges would photocopy the electric bill, divide it by the number of tenants on a particular meter, and submits the bill to each student tenant. So I said "sounds like lots of work". He laughed and said his dad adds a handling charge of $10.00 per bill. Has a number of rooming houses, around 20 to 30 students, at $10.00 per student, collects over $3,500 a year in handling fees. It's about an hour of work per month for $300/month. Not bad for a hassle. Sounds a lot better than spending $3,000 on an electrician, and going through the trouble of getting CO's.
Bottom line, if you can't do it the "no hassle" way, do it the hard way and make a few bucks out of it. I was surprised the student tenant's didn't complain, as their parents probably paid for housing and tuition.
Great plan there!. Im sure there's some other options in there as well. This may even be something a VA could do at scale!. Id be interested to connect on these "rooming houses" my son moves to college this fall and I thought it may be a good way to teach him REI and help offset his expenses. Ill sent you a message Frank.
To be upfront I come from the metering end of the thread.
Submetering can be easy and it can be hard, it all depends the layout and what can be done.
When talking about water if you have one line going to an apartment a $50.00 meter can be installed however is that water line feeds more than one apartment in a manifold situation, you may be better off with ratio billing.
Electric is the same way. However, before your electrician bills you for his new truck, check with a professional, there are utility meters that can put current transformers over breakers where more than one apartment is fed off of a breaker box.
Message me for more info
Real Estate Agent · NH · Member since 2020 · 23 posts · 54 votes
6y
Brian Roberts and Lee V This is good advise. I have been a property manager for over 25 years and your advise is the very best way to keep an eye on things while assuring that if the utilities exceed the designated amount on the lease, the tenantsare responsible for any overage. It's pretty simple if you designate for example, that if the utilities exceed $50 the tenant pays the overage. I managed several places that we did this on. It works!
Investor · Fayetteville, NC · Member since 2018 · 263 posts · 216 votes
6y
Whatever method you use to bill the tenants (flat fee, split the bill, RUBS, etc.) ensure you have the appropriate language in the lease that way the tenant won't have leverage if they push back. This should also help you if they tenant decides to withhold payment and you have to go to court for eviction.
Brian Roberts and Lee V This is good advise. I have been a property manager for over 25 years and your advise is the very best way to keep an eye on things while assuring that if the utilities exceed the designated amount on the lease, the tenants are responsible for any overage. It's pretty simple if you designate for example, that if the utilities exceed $50 the tenant pays the overage. I managed several places that we did this on. It works!
I think putting terms for overage makes sense in general, but when you bring up the "designated amount", doesn't it tempt the tenants to ask you later "This past month I should have used less than $50, so why should I pay more than what I used?" Basically, to them this means they are required to pay a minimum amount of $50 per month, even if they used less. So I guess this may open the door to conversation and argument between the tenants and LL. But I am glad that your experience was otherwise. Perhaps just asking a fixed rental amount, with includes utilities, would prevent arguments but I still like to add the overage term.
Brian Roberts and Lee V This is good advise. I have been a property manager for over 25 years and your advise is the very best way to keep an eye on things while assuring that if the utilities exceed the designated amount on the lease, the tenants are responsible for any overage. It's pretty simple if you designate for example, that if the utilities exceed $50 the tenant pays the overage. I managed several places that we did this on. It works!
I think putting terms for overage makes sense in general, but when you bring up the "designated amount", doesn't it tempt the tenants to ask you later "This past month I should have used less than $50, so why should I pay more than what I used?" Basically, to them this means they are required to pay a minimum amount of $50 per month, even if they used less. So I guess this may open the door to conversation and argument between the tenants and LL. But I am glad that your experience was otherwise. Perhaps just asking a fixed rental amount, with includes utilities, would prevent arguments but I still like to add the overage term.
My read on the first quoted post was “the rent has a built in $50 toward utilities; exceeding $50 worth puts an overage charge upon the tenant.” Wherever I have to pay a utility bill on a rental, when usage is excessive I will talk with tenants regarding that, explaining that the rent will increase to cover some minimum amount when that becomes the new “normal regularly billed amount.” Interestingly enough, I had that talk with a tenant many months ago and raised their rent because usage continued (and even increased); after that the utility usage went down!
Rental Property Investor · Bay Area CA | Maui HI · Member since 2018 · 49 posts · 47 votes
6y
In my experience, when it comes to utilities, you want to focus on two priorities: 1) preserving as much financial incentive as possible for each tenant to conserve water, gas, and electricity, and 2) full transparency in the lease.
When I know tenants will be sharing a meter, I keep the utility bills in my name and then spell out the reimbursement process clearly in the lease. That process is nearly always to split electric and gas according to respective square footages and water according to headcount (all children included). If someone goes on vacation for a few weeks, they don't get a "credit" for their non-use beyond their pro rata natural reduction in the overall bill for that month. They can't argue about that because the lease is clear from the beginning that they're responsible for X percentage of the total bill no matter what. Yes, this approach requires some basic level of trust and reasonableness between tenants, but it has worked well enough for me thus far.
I've found that when you wrap utilities into the monthly rent or tack on some sort of fixed fee, tenants suddenly start taking longer showers and leaving the lights on for days at a time. It's not intentional. It's just basic psychology that behaviors change when incentives change. Then you end up getting into esoteric debates about "reasonable use" and whether the thermostat really needs to be set at 66 all summer. That's no fun.
Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
6y
Do a google search for submeters. I can't recommend a specific brand and some are for water only - not electric. But it's worth looking into for your situation.
Here's my take, I use the liveable company to handle Rubs (they are great), works for me! I keep it separate from Rent, its not part of the increase. Also, I notice when people have to pay for services, the bill for water suddenly went way down, from high 350's to 170 range. King Regards to all.
Investor · Bloomington, IN · Member since 2019 · 76 posts · 55 votes
5y
The best long term solution would be to submeter for each house. There's a ton of different submeters out there you can buy online or in stores. We are currently working on a mobile home park, and everything is on one meter. So, we are sub-metering everything with the city. However, some cities/water companies won't help you out, but I'd ask them first. We had planned with a plumber to submeter one way or another if the city wouldn't help us. By installing submeters you'll be able to identify and isolate leaks quicker and easier. This also helps you accurately bill back tenants for their actual usage instead of trying to just split it three ways.
I live in Cali and I converted my 5 bedroom house into two units consisting of a 3unit and two unit I'm actively looking for a second duplex now I've been thinking about how to split the utilities since I have one electric meter so I came up with an idea please chime in if there a potential error my monthly electric bill the max it has been in the last year was 250.00 in winter the cheapest has been 150.00 so my thought is to include 100 bucks per each unit which would include that if the bill goes over 250 the would have to cover the overage your thoughts thanks
Ive bought a meter base with a meter on ebay before and installed in a units subpanel long as its split for main feed access. Subtracted from bill. Worked liked a champ.