I'm curious to know what strategies all of you more experience landlords have used to reduce your water bill? I heard submetering, tankless water heaters, drought-tolerant landscaping, etc. Not sure where to start. But yeah, just curious what you all have done to help reduce this expense? Our month-to-month lease with our tenants states that we pay the water bill and as of right now, the average bill is about $310.00 a month on our 4 unit.
I'm curious to know what strategies all of you more experience landlords have used to reduce your water bill? I heard submetering, tankless water heaters, drought-tolerant landscaping, etc. Not sure where to start. But yeah, just curious what you all have done to help reduce this expense? Our month-to-month lease with our tenants states that we pay the water bill and as of right now, the average bill is about $310.00 a month on our 4 unit.
Thanks!
Tankless water heaters would only save you on the energy your normal water heater would use, since it doesn’t have to constantly heat 75 gallons to make sure you have heated water ready at a moments notice. Actually having a tankless water heater, if the tenants know or find out may incentivize them taking longer showers since the hot water never runs out. So although they can save you money on energy costs, not so much on the water used.
In my lease right now, we get a $200 allowance for water that’s built into our rent payment. If we go over $200, we are required to pay the rest. Might be something to consider.
From the overall investor-with-investments perspective, rather than operator, there are properties and places with wells--i.e., not on municipal.
This may be totally obvious to the poster and many viewers, but I often find if people invest in a limited geographic area it's easy to assume certain costs as price-of-doing business. There are some things you pay a lot, a little, or nothing for depending on where you are.
If the average is about $310 a month for 4 units, that is $75 per unit and not too bad as far as their usage goes. As your rent includes water, then I'd make sure what you are charging for rent is about $75 higher than units that don't include the water. While they are all month to month on their anniversary of their move in, raise the rent a bit to cover some of those costs.
Even if you installed tankless water heaters, you'd still be paying for water and now you'd have the extra cost of the water heaters and I don't see how that would save you money for water.
@Erik B. The best way to reduce an expense is to eliminate it, if you can set up submetering and have tenants pay for it themselves then you won't have the expense. I'd start by reaching out to the water company to see if it can be set up in your building.
@Erik B. After my 1st property that had one water bill for a triplex, I’ve only purchased buildings that had individual meters for each unit when I purchased.
In that property, I charge a set rate for utilities, based on number of rooms. It is less than the annual cost, but law states you can’t profit on utility charges, which I don’t, and it’s close enough to neutral for me.
It's not worth my time to figure out RUBS or be a water municipality in addition to a REI, W2 employee, husband/father/family member and give back to community.
Speaking strategically, you can choose your “issues” when you buy, and I don’t cross that bridge anymore.
This probably doesn’t help your current situation, but is the answer I have for you.
What is the actual usage vs the amount of bill? I monitor actual usage divided by the number of tenants in building or the number of billing cycle days. The average per person uses about 200 gallons per day. This changes +/- times during the year - example holidays increase, warmer months.... All the other excessive utility charges, distribution charges, taxes and improving the water facilities (never happens always reactive vs proactive) you can not control. Yes some calculated on usage.
Monitoring Usage also lets you know if there is an issue that a tenant may not be communicating. Public water is hard on the flappers and not all flappers are made the same. Flapper checks should be a part of maintenance check list.
Also with COVID with adults/children working/schooling from home increases water usage.
The low flow toilets have come a long way and the Kohler powerful self-cleaning pretty impressive.
Also communication to tenants is key with regards to included water.
In Toledo the water must be billed to the owner of the building. In order to get around this we split bills in 1/4’s for 4 units, 1/2’s for duplexes, and 1 single bill for single family homes. This is in our lease agreement, which the tenant clearly understands/initials by before moving in.
1. Pay bill
2. Take photo of bill
3. Split bill accordingly
4. Send tenant photo of bill and corresponding amount to add to their next rent payment. We do not accept partial payments, as that limits our ability to evict if necessary.
This requires a little more effort each month as the bills come in. However, it is the only way we have been able to hold tenants accountable for their water usage. They simply were not calling us when their toilets were running constantly, as they had no incentive before being responsible for the actual bill.
As long as you are upfront and honest with your tenants about how this process works before you lease to them, then you will not have any issues. This has worked extremely well for us when it comes to increasing that bottom line.
Similarly, we also do this in multi family buildings with a singular gas bill. These two small adjustments will save you thousands of dollars per year.
I'm curious to know what strategies all of you more experience landlords have used to reduce your water bill? I heard submetering, tankless water heaters, drought-tolerant landscaping, etc. Not sure where to start. But yeah, just curious what you all have done to help reduce this expense? Our month-to-month lease with our tenants states that we pay the water bill and as of right now, the average bill is about $310.00 a month on our 4 unit.
Thanks!
Hi Erik. Since the bill is high, I recommend one of the following: 1) Slightly reduce the rent, but the tenant is now responsible for the water bill 2) In future leases put a cap on what you pay for water($200-ish) and the tenant pays anything for monthly bills over that amount 3) Re-think your landscaping to be easy care without the watering 4) Re-think your water use and why it's so high- is there a problem? What are the alternatives to home systems that are leading this?
If it's just a tenant that is driving it up and it's not due to landscaping, home system inefficiency or leaks, I highly recommend you (to some or all degree) put it on the tenant to pay the bill. Month to month is a beautiful thing, as you can modify the agreement.
I see that you're in CA which has some serious water issues already so figuring out why the water bill is so high is super important.
Is there landscaping? If so perhaps you can install a greywater system that would cover all of your irrigation needs. They are very inexpensive, low maintenance and can potentially provide a food forest/garden for the tenants.
Rainwater capture and reuse (for irrigation and toilet flushing) is another option but much more expensive.
Doing regular maintenance and checkups on all faucets, toilets and showerheads will help you keep an eye on leaks. One leaky faucet can waste 20 gal/day!
200gal/person/day is an extremely high water user! Perhaps you could incentivize your tenants to reduce their water usage by offering a credit to their rent if they reduce by x amount.
I know most people look at this as a $ issue/problem/situation but it's also a very serious environmental problem.
For my green real estate business, I install environmentally friendly and beneficial systems that will benefit the owner, tenant and the environment!
I know some people in LA who install greywater systems if you're interested. Or hit me up if you want more info about any of these types of money and environmental saving systems.
There could also be tax breaks or county incentives in your area to help.
We own several fairly large apartment buildings in the Los Angeles County area and our water costs us an average of $60 per month per tenant.
I am fairly sure the cost for water tripled in the past 10 or 15 years and we would probably be paying more than $120 per month if we had not installed water-saving toilets, water-saving shower heads, water=saving bathroom sink and kitchen faucets and we removed all the laws, shrubs and trees from every property we own and installed rocks and only 4 to 8 cactus plants on every property. Otherwise, our water for the lawns and plants would double our current water bills.
At first, tenants complained about the rocks and when they realized that having rocks totally eliminated those millions of tiny bugs that fly around dusk and they never had to hear the lawnmower motor our tenants live the rocks. It cost tens of thousands of dollars to install the rocks because we hauled away 6 inches of soil, put down 4 inches of crushed concrete base and 2 inches of rocks so we have very few problems with weeds coming up through the rocks and I think we more than recovered our costs in about 7 to 10 years plus we don't have to pay for grass seeds, don't pay for the water and no longer pay a gardener.
For my rentals I do not allow access to the spouts outside for washing cars or anything. Haven't had anyone complain yet. I have been recently changing out toilets in the complex and also installing low flow heads for the showers and aerators for the sinks. What you want to do is whenever you get the chance to do an inspection toss some dye in the tank of the toilet, walk around the rest of the unit and talk to the tenant. Before you leave check the toilet bowl if you see any dye in there then you have a leaking flapper, get a kit and replace it. You'll be amazed on how that alone will reduce your bills. You could also get a system which tracks the water usage on each unit, little costly upfront but then you can legally bill the tenant for water in the future. Good luck! Hope this helps!
@Erik B. I pay about $300 per quarter for my 4-unit that is metered. I have figured each unit is using approximately 27 gallons of water per day which seems reasonable. That’s three single tenants and one couple. So I’m sure the average is a little off.
In another town with cheaper water rates I have a couple getting charged $18 a month also metered.
My partner and I live in a third town and we pay a flat fee of about $300 per quarter for all the water we could ever want to consume. In fact I used to fill my 30,000 gallon swimming pool for $500 flat fee per quarter in this town (bigger house, more bathrooms thus a bigger flat fee).
I think the key is to set your rents accordingly as I looked into Submetering the 4-unit and it was going to be a bigger pain than just factoring in the extra cost and passing it on to the tenant. Where I live only SFH pay for water, apartments do not but my units are nice so I can easily charge an extra $25 to offset their water usage.