How to separate water utility for tenants?

11 Replies

Hi. I was wondering how anyone has gone about separating water utility for tenants and billing it back to them? I have isolated all the water lines for my units but haven't figured out if I should call the water company and have them sell me water meters or if there is a water meter I can buy online that possibly hooks up to wifi to report usage. What have you all done? 

My experience in Philadelphia has taught me the utility company takes months and months to install a new water meter. My client went under contract in MARCH for two side-by-side triplexes which had no water meters. Since we couldn't close without a water reading, we had to wait for meters to be installed. We are STILL waiting, and it's nearly August.

Maybe the utility company in Chicago is more efficient.

However, I know submetering is possible as long as the plumbing is separated between the two units. I believe they can be bought for around $200 each and installed within a day. I'm sure there's a smart submeter option to allow a wifi connection.

@Ben I. - Curious about what other thing (@Mark Ainley@John Warren or @Brie Schmidt ), but my thought is it may not be worth doing here in Chicago (and not sure if you can) since it is almost standard that the landlord pays the water.  I feel like you may eliminate a large section of your tenant pool because you are having them pay for water when every other landlord doesn't.

Originally posted by @Jonathan Klemm :

@Ben I. - Curious about what other thing (@Mark Ainley@John Warren or @Brie Schmidt ), but my thought is it may not be worth doing here in Chicago (and not sure if you can) since it is almost standard that the landlord pays the water.  I feel like you may eliminate a large section of your tenant pool because you are having them pay for water when every other landlord doesn't.

I have some SFM that I have the tenants pay for the water, but you are right when it comes to apartments. If I can find an option that hooks up to Wi-Fi, I'm considering offering two options when they sign the lease. One would be a higher option where water is included and the other one would be a lower option where they pay their own water. 

I think in most states it is illegal to bill tenants for water because you need to be a legal authorized water purveyor. I has 1 17-1/2 acre parcel of land that had one water well. I wanted to divide the property into 3 parcels, share the well, charge the other parcels for maintenance for the well for the portion of water they use and I was told it is illegal to be a water purveyor.

As for installing separate meters, the idea is crazy. You have to install separate water mains from the meters to the property and then you need to re-pipe each unit to separate the pipes and you are talking $5,000 to $10,000 for each unit for the water piping plus the price to bring in new mains to the house.

You won't live long enough to recover your costs.

I just purchased a screwed up 6-unit property. I remodeled an apartment and when the tenant called the electric company to put the bill in her name we found that her apartment is connected to the House Meter for the laundry room and outside lights. So, I think I went a little to low when I told her to add $80 per month for the electric she uses. I did call the electric company to install a separate meter and can do the electric myself.

Originally posted by Jonathan Klemm:

@Ben I. - Curious about what other thing (@Mark Ainley@John Warren or @Brie Schmidt ), but my thought is it may not be worth doing here in Chicago (and not sure if you can) since it is almost standard that the landlord pays the water.  I feel like you may eliminate a large section of your tenant pool because you are having them pay for water when every other landlord doesn't.

I have seen a few thousand 2-4 unit properties in Chicago and never once have I seen water metered separately.  I have no idea if it is legal or how much it would cost.  You would need to offer rent lower than market rents to be competitive as you are the only person who adds it on as an additional expense.   

Let me give you a couple of potential sources that may help. Check out this company if you are looking to get your water bill under control: https://www.econservellc.com/. I think they are located in Houston but will come to your property. Also, I did a podcast with this guy whose company is set up to reduce utility expenses for your properties. Here's a link to the podcast here: https://www.multifamilyinvesti...

Hope that helps.

@Ben I. Thanks @Jonathan Klemm You have to get the meter from the city but what I see people do that is easier is simply bill back based on proportionate share or simply add a flat fee of water to be collected each month with rent based on average uses the prior 12 months.   

Definitely doesn't seem to be worth doing after everything I've read. The idea was in my mind after hearing it as an example on many episodes, but I guess it's more applicable for commercial units. Thank you all for the feedback. 

I agree with Mark. I have a two flat in Beverly but only one set of utilities. When I market them for rent, I advertise a price slightly lower than market rents in the area but included in the description is a flat utility fee for gas/electric/water ($1100+$175 utility fee). Between the two units, I bring in $350 a month which more than covers the bills. Tenants seem to appreciate always knowing their rent/bills will be consistent and I don't have to offer “free water & heat” like I do on my 4 unit building. 

I have used a product from https://truesubmeter.com/ and it works fairly well. Small company, a little bit of a pain to get set up, but it connects to a cellular network (not the tenant's wifi) and can either meter the water at point of use (each sink, shower, toilet, etc) or have a main meter if your plumbing is separated. 

I don't know the legality of it in Chicago, but when I researched it in PA (Philadelphia suburbs specifically) it seemed like I was ok, so I did it. 

Worth looking into. 

Most cities will alllow water billing if you can prove you have proper metering setup, so tenants are actually charged per usage.

Pretty sure companies offering submetering will be able to assist with the legalities and they are cheaper than paying city for another meter.