How to deal with non-separate utilities in a multi-unit in Philly

How to deal with non-separate utilities in a multi-unit in Philly

Investor · Philadelphia, PA · Member since 2017 · 6 posts · 2 votes

How do you deal with getting tenants to contribute to water, gas, and electric if there are not separated meters in a multi-unit in Philadelphia?

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Minneapolis, MN · Member since 2013 · 2k+ posts · 1k+ votes
9y

Water is big difference... that utility is usually paid by landlord , cost to sub meter is very expensive and you'll learn to monitor your bills.. you'll tell if extra person moves in or if you've go a leaky toilet. but good idea is to check meter when no one is around and see if the spinner is still, if no you've got a drip, or leaky toilet, so put up notices and inspect.

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  • Health Care Administration · Philadelphia, PA · Member since 2015 · 65 posts · 65 votes
    9y

    I'm also curious as to how landlords deal with this. Water in my duplex is not separated by unit, so I pay the whole bill myself. 

  • Minneapolis, MN · Member since 2013 · 2k+ posts · 1k+ votes
    9y

    Water is big difference... that utility is usually paid by landlord , cost to sub meter is very expensive and you'll learn to monitor your bills.. you'll tell if extra person moves in or if you've go a leaky toilet. but good idea is to check meter when no one is around and see if the spinner is still, if no you've got a drip, or leaky toilet, so put up notices and inspect.

  • Investor · Columbus, OH · Member since 2017 · 861 posts · 1k+ votes
    9y

    For my unmetered duplex, I use a system called "RUBS"  "Ratio Utility Billing System"..    You determine the number of "tenant days" for each unit, and the total "tenant days" for the entire bill, and allocate accordingly.   

    There are good descriptions all over the internet, but normally it just simplifies down to the ratio of number of people in each unit over the total number of people using that utility in total, but when you have vacancy/turnover, RUBS allocates more fairly, so the tenants are only paying for the days they were in the unit. 

    That assumes there aren't any other non-tenant consumers of each utility, like exterior lighting, sprinklers, etc. 

  • Investor · Philadelphia, PA · Member since 2017 · 6 posts · 2 votes
    9y

    Thanks.  Looking for answers specific to Philadelphia as I know the rules here are specific to the location.

  • Flipper/Rehabber · Yardley, PA · Member since 2015 · 451 posts · 307 votes
    9y
    Anita Andrews if all the piping etc runs into basement you should be able to separately meter heating (if it's radiators/has forced heat), call PGW to add gas meters. Electric is more difficult as you would need to know which wires run where in the building. Assuming you can split the electric you would have to call peco to setup separate meters and accounts for each apt. Of note I'm unsure if pgw and peco would ask you for proof of multifamily zoning before coming out to install the meters. I've only been in situations where I've had them out to upgrade or replace their meter.
  • Investor · Philadelphia, PA · Member since 2017 · 6 posts · 2 votes
    9y

    Great thank you @Mike B.  How have you handled water?

  • Philadelphia, PA · Member since 2017 · 14 posts · 1 vote
    9y

    Hi @Mike B. do you know (even if its an estimate) how much PGW would charge to add the new meter? For electric, you'd need an electrician to install the new meter or is this a service PECO provides? 

  • Flipper/Rehabber · Yardley, PA · Member since 2015 · 451 posts · 307 votes
    9y
    Anita Andrews water I paid myself but my rents were slightly higher to factor in the water cost. Shantaviae Wynn : PGW and PECO will install new meters for free. The plumbing or electrical feeding or leaving the meter to your units you pay for. For example in a recent home I renovated both of the meters were old and nonworking. After finishing my plumbing and electrical and other renovations I called PGW and PECO and have them come in and replace both meters with new ones. PGW meter is esp important as they have told me certain meters only allow a certain gas flow. So if you change your home from using minimal gas to using more gas with appliances, gas heat etc. this is an important step.
  • Jamaica, NY · Member since 2017 · 6 posts · 1 vote
    9y

    @Mike B, Curious also as am looking into purchasing a duplex with shared utilities and was told by my realtor that it would cost approximately  $6000 to do the separation- that's for a new water heater, electrical panel and install. Does this sound correct to you

  • Investor · United States · Member since 2015 · 415 posts · 487 votes
    9y

    When I've dealt with this, I just took an average of the past few years' usage and had the tenants pay it as a fixed amount. I didn't want to have squabbling over who is using more power and who should have to pay more, etc. The risk here is obviously that since they are paying a fixed cost for utilities, that they will run up the bill, but I have never had that happen. The best thing about this solution is that it's free.

  • Investor · Philadelphia, PA · Member since 2014 · 344 posts · 276 votes
    9y

    Hi @Anita Andrews,  I believe your original question was how to handle getting tenants to pay there fair share when the utilities are not separate.  You start by clearly explaining in the lease how the utilities will be divided between the units.  Ensure that  you give the tenants a copy of the bills far enough in advance of the rent being due so they know what to expect and they have time to pay you.  You can estimate what the monthly payments will be (although I think this is tough.  How do you estimate for an unusually hot summer or a colder than normal winter?)  and give them a bill based on this monthly.  However, your tenants will expect to see an actual bills.  If you have a management company they should handle this for you and give you some good advice on the best way to handle the situation. 

    I would strongly advise you to keep the water bills in your name.  For two reasons, it is very common in Philadelphia that the water bill is paid by the landlord.  Therefore, tenants will expect this.  If you are asking them to pay water as well as the other utilities this may be a reason for them to move on to another unit.  Two, water bills are a lienable event.  The City of Philadelphia owns the water department so by law they are allowed to place a lien on your property for unpaid water bills and to sell it at Sheriff Sale if the debt is not satisfied.

    I warn you this can be tricky to handle on a monthly basis getting your tenants to pay without pulling teeth or hearing complaints from the tenants.  Such as, "I am only one person in my unit the other unit has two they have more usage than me. I should be paying less."

    One last thing to consider, you will be responsible for all utilities whether your tenants reimburse/pay them or not.  Your name will be on the bills as the primary account holder and responsible party. If your tenants stop paying rent you are stuck.  At least if the utilities are in their names you won't have to eat the cost of the utilities as well.

  • Flipper/Rehabber · Yardley, PA · Member since 2015 · 451 posts · 307 votes
    9y
    Felecia Brown that may be a good price but depends on how many units (assuming a duplex) and size of each unit. If all the wiring and piping is in the basement and easily accessible then it'll definitely make for an easy job
  • San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
    9y

    I know you asked about your specific area, but it seems to me that any landlord who deals with an un-metered property can give advice on how to handle that.

    In the property I  managed, which did not have separate meters in Silicon Valley, CA, in a converted very old building, we simply charged rent that included the average cost of providing utilities for a unit.  Can't you do that?  Wouldn't you be able to advertise your units at such and such a price, utilities included?  That would leave a margin for the cost of utilities?

    And as mentioned above, to check water usage, inspections are great.  We did inspections every 6 months (26 unit building), and would check smoke detector batteries as well as look for leaks or running toilets.

    And if the water bill went up significantly, we'd do additional inspections, looking for the inevitable running toilet.

    Next best option is to use month to month agreements, so if you suspect a unit is going crazy with the utilities, you can get rid of that tenant.  An example: we had a young couple who were undergrad students, and we went in there one day to fix something, and found the air conditioner and the heater both running, like mad, each trying to outdo the other.  When we brought it up, they didn't care.  They were also having loud parties, so 30 days notice - adios.

  • Investor · Philadelphia, PA · Member since 2017 · 6 posts · 2 votes
    9y

    Thank you @Paulette Midgettete Great Explanation.

  • Rental Property Investor · Jersey City, NJ · Member since 2011 · 1k+ posts · 876 votes
    9y

    I have a steam heat 4U, and when I bought it I contemplated separating the heat.  It would be huge, like $50k. I finally realized my cost wasn't to heat the place, my cost was how much I paid over what utility costs I built into the rent. So if I get the rent right, it costs me nothing.  As pointed out, most multis do this for water, you just need to be OK doing it for everything.

    Common electricity is a bad idea though, far more subject to abuse than heat. Separating costs depends on how the place is wired. I lived in a large NYC apartment building with metered gas for the stove but provided heat and electric. Go figure. No one ever turned off their AC's.

  • Investor · Philadelphia, PA · Member since 2012 · 11 posts · 4 votes
    9y

    many multi's in the area have a flat water rent listed in the lease as a separate number with a clause allowing adjustment with 60 days notices based on increased use or municipal tax increase.  This can impact the desirability of a unit if it is not customary in your specific pocket of Philadelphia but also allows for a lower true rent when it is status quo.

  • Investor · Chambersburg, PA · Member since 2016 · 97 posts · 18 votes
    9y

    I was looking for the actual cost to split 1 water meter into two and came across this thread, so here are my ideas.  The below examples were my thoughts on units where there is only 1 heat source in a multi-unit.  Yes, I know I was talking about water and then jumped to heat, but I think it could apply to most utilities.  I'm also listening to a conf. call, so hopefully I'm making sense.

    1.  Landlord pays for Jan. tenant(s) pay Feb.  Landlord pays March, tenant(s) pay April, etc.

    2.  Go back to the previous year and get the total bill for the year.  Divide that by 12 to get a monthly average and then split that between all tenants evenly.

    These would be options where physically splitting utilities would be cost prohibitive.

  • Real Estate Agent · Philadelphia, PA · Member since 2016 · 115 posts · 61 votes
    7y

    @Mike B. that's music to my ears!  I'm going to be separating the gas meters soon in Bridesburg.  Good to know PGW doesn't charge for additional meters!

  • Member since 2018 · 16 posts · 1 vote
    6y

    How much cost to convert half bath to full bath in basement 

  • Member since 2021 · 1 post · 0 votes
    5y

    I have a question about this- my landlord has our building fully on solar, and wants to charge us a $50 flat rate for utilities. When I moved in almost 4 years ago, they hooked us by saying all utilities included.. but that changed.. I saw something online that each unit has to be sub metered to get a utility bill so each tenant gets charged properly. does anyone have any words of wisdom on this topic? I’m located in philly. Thanks so much! 

  • Real Estate Broker · Chicago · Member since 2021 · 108 posts · 23 votes
    4y

    One of the most common questions I get from landlords is how to deal with non-separate utilities in a multi-unit.The law in Philadelphia states that if there are more than 3 units on one property and all apartments share a heating system then each tenant must pay their proportional share of expenses when they move in, based on what is determined by dividing total costs by number of tenants. If there is no separate heating system then you just need to ask your tenants about their individual agreements with PGW (Philadelphia Gas Works) and PECO (Philadelphia Electric Company). You should also check the lease agreement to see if the tenant is responsible for paying utilities. The law requires that the lease clearly state who is responsible for these expenses. If you have a side-by-side property with 1, 2 or 3 units and tenants share a gas system then it might be written in the contract that they are responsible for payment of all expenses including water/sewage, but not responsible for installing or repairing anything that goes wrong. The only exception to this rule would be if there is a clause giving the landlord responsibility to collect payments from each tenant. In Philadelphia, landlords can pass on costs of water/sewer bills through their rent (under Act 247). 

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