Real Estate Investor · Chicago, IL · Member since 2016 · 77 posts · 18 votes
I am in the process of purchasing a multiunit where I will owner occupied. I am trying to figure out how to properly estimate water, sewage, trash and bake them into Rents. The building is currently under contract and will eventually be rehabbed. I have some time to think this through so I thought I would reach out to all of you to see how you address this. Thank you so much!
Property Manager · Katy, TX · Member since 2015 · 1k+ posts · 1k+ votes
6y
Hey Maria,
If you're not going to separately meter like @Andy Nathan mentioned. Then we just divide the water bill up between the tenants based on each units square footage. For example, if side A of the duplex was 1,000-SF and side B was 2,000-SF, and the water bill was $150. Then side A would pay $50 (1,000/3,000 * $150) and side B would pay $100 (2,000/3,000 * $150).
Are the units each on their own meter? If not, find out what the water bills have been over the last 2 years making note if any units were vacant, work it out to a monthly cost per unit and go from there.
Property Manager · Katy, TX · Member since 2015 · 1k+ posts · 1k+ votes
6y
Hey Maria,
If you're not going to separately meter like @Andy Nathan mentioned. Then we just divide the water bill up between the tenants based on each units square footage. For example, if side A of the duplex was 1,000-SF and side B was 2,000-SF, and the water bill was $150. Then side A would pay $50 (1,000/3,000 * $150) and side B would pay $100 (2,000/3,000 * $150).
Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
6y
Best way is to sub-meter each unit. If you're doing a rehab, you should have access to the main feed unless it's common hot water. The meters are cheap and now are wifi. DM me if you want samples, but a Google search will work.
With water the idea is to minimize usage since, at least in Portland, it is so d*** expensive (like $100/unit/month). If you just do a buried flat rate, the fee is the same if they use no water or leave the taps on all day.
With sub-meters, the less you use, the less you pay - Just like real people.
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
6y
@Maria Bocanegra I have one client in the suburbs who does a RUBS system for water bill back. I haven't gone that route, but his mentor owns hundreds of units and has implemented this system successfully. What I don't like about this system as that it still just splits the bill up between everyone and doesn't penalize people for over use. You can do the sub meter route, but think through what the market offers tenants. If you are not in line with the market then your tenants will choose another property before yours or you may be perceived as cheap, etc.
Rental Property Investor · Chicago, IL · Member since 2019 · 17 posts · 9 votes
6y
I agree with @Sarah Lewis. I have a four flat under a gut rehab in Chicago and could not have the water meters separated by units. Best to get the historical water bill and average out among tenants if that's what you're looking to do.