Meter my water or not?

Question

Nathan Gesner · Answer

@Bradley LaBrie I'm not quite understanding. If you are on a well, there shouldn't be a charge for water use.

The water heater will use electricity or gas, which should be metered for each unit. Is that what you are referring to?

You can pay to meter everything separate or just get an average, split it into four, and then charge the tenants. I recommend increasing their charge by 10% to cover fluctuations and setting a limit. For example:

Average utility is $200 a month. Each unit share would be $50 plus a 10% increase, so $55 per unit. I bump their rent up $55 and tell them utilities are included up to $60 per month. If the bill is $280, I would cover $60 per unit and charge the tenants for the additional $40 ($10 per unit).

Blair Poelman · Answer

If you have the ability to put them on separate meters, you should.

It is customary (at least in the 50+ cities I've done multi-fam deals in) for the owner to pay for utilities on a multi family property that does not have separate meters.  It might cost you a fairly hefty amount to put the meters in, but you will likely save yourself a bunch of money.  That is also a fairly substantial capital investment that should give you an increase in value.

Amanda G. · Answer

what is your cost benefit analysis on it? Separate meters give your tenants a reason to conserve water, and keeps you out of paying their utilities. If you are going to put in four separate hot water heaters, wouldn't it make sense to match those to separate units?

One possible way to think of it is to take a worst possible scenario of water use per month, take the cost of the separate meters, and divide to see how long it would take to re-coop the difference. If you are planning on holding the property longer than that, put in the meters. And remember, things tend only to get more expensive over time. Good luck!