How do I get out of paying water?

8 Replies

So I found this duplex and almost everything about it is great. It would be a great deal... If I didn't have to pay the water bill. The water bill is going to kill my cashflow. Do you guys know of any ways to get out of this and put this on the renters besides the obvious "getting another water meter" I've heard of landlords putting some kind of meter of their own on each main line going to the different apartments and then reading it each month and billing the tenants. Then they pay off the water company. Idk where to get these or how to really go about that. Could I shut their water off if they don't pay me? If anyone has an answer for these questions or another suggestion to get around paying the water bill i would be very grateful. Thanks guys! 

@Brandon Handel Sometimes it’s easier just to raise the rent to compensate and pay it yourself . It’s a write off . In my city I have to pay it and you are right it sucks . If the water bill kills all your cash flow / profits then your deal isn’t that great ! ...and you need to keep looking

I quick Googled to try to find what it was I was thinking about with metering and billing the tenants. It seems there are some companies that will install it for you and allow you to bill the tenant directly online. It also has the benefit of alerting me if it detects a water leak which could be a life saver if say a frozen water line breaks in the middle of the night. No one would know because no one has access to the basement and there's a sump pump in there so it would just keep going and going I imagine.  Have you ever tried any companies that install the sub meters? 

@Brandon , Look into Allocated Utility Service.  Under a lease agreement, a property owner can allocate the tenant for water and perhaps wastewater using an allocation method. 

RUBS is also helpful if units share gas and electric. RUBS is a utility billing method that allocates 100% of your property's utility bill to the residents based on an occupant factor, square footage or a combination of both, less a predetermined percentage (determined by you, the owner) of a common area allowance.

Hope this helps, GL! 

@Brandon Handel   Make sure your analyzing your property correctly, if water kills your cash flow, then your likely not budgeting properly.  

I analyzed correctly. Having to budget for water kills the cashflow. That's why I said I'm looking for ways to get rid of it and turn it into a good deal. I'll look into your ideas though, thanks!

@Brandon Handel Another option would be to bill a consistent amount. For example, if your water bill averages $200/mo for 4 units, charge each unit $35. It’s less than the total - so you dont have complaints about one unit using more water than another, but youre getting much of your costs back. Note that some states don’t allow charging for un-metered utilities.

What is the market doing? If you charge $1100 rent + bill back water and the house next door charges $1100 and does not charge for water, you will have to lower rent to stay competitive.

The question is not always, can you (you can) but sometimes it is should you.

You could do a RUBS program but a duplex is rather small for that, I would raise the rent or charge a flat Utility fee.  Either way it the total monthly cost still has to be in line with the market.

When you say this "kills" the cash flow that seems quite tight.  I have a duplex and the water / sewer bill is about $40...mine is in an inexpensive area but so even $80...If it were me I'd be careful...if things are that tight I you need is an unexpected vacancy or repair and that eliminates the cash for the entire year...say $60 a month X 12 months anything loss of rental or unbudgeted expense over $720 does the same thing.  I for one would not do it unless you and mitigate that expense AND everything about the property is in tip-top shape (and that is a maybe)

If you can't build the water into the rent and your "cost" be only variation above that, something is wrong in your analysis. Where I am no multis have individually metered water. One of my buildings I pay the steam heat. Same thing, build it into the rent. I once lived in a large NYC building with unmetered electricity, imagine that landlord tearing his hair out!