Flow Meters in Multi Family Units
This past month we had to pay an extra $600 in water and sewer costs due to an undetected water leak. (unfortunately it is set so landloard pays water and sewer utilities) I really want to install flow meters so that the tenant pays water and sewage..... Perhaps that way they will take responsibility for water usage and noticing of leaking water or constantly flushing toilets. However I have some practical questions.
1) So let's assume the tennant at unit 101 shows the $600 usage and the other 3 tenants show normal usage. Since each tenant with flow meters don't pay the water company directly, how would we collect the $600 form tenant 101. Could they be evicted if they paid the rent but not the water bill. Or will they claim the landlord has to pay the unusual bill even though they didn't report a constantly running toilet or other unusual leak, or perhaps they didn't even notice.
2) So with all those thoughts and possibilities in question 1, Is the flow meter installation on a 4 plex worth it? And how do you enforce it? Normal water and sewer bills are about $200 total per month in the 4 plex. Last month's was $800. (Since then toilets have been worked on and had parts replaced and the water and sewer bills are back to normal)
3) Also thinking of replacing window AC units and baseboard heaters with mini splits. I am thinking if we do that first and then require tenants to pay their own water and sewage with a water flow meter. Since they will be saving on electricity, and living more comfortably, they likely won't balk at having to pay for water and sewage and we won't end up with all our renters moving out of the 2BR 1BA units in the fourplex that are currently renting for $600. Am I right?
Replacing window a/c and baseboard heaters with mini splits can be a massive improvement in the comfort and general appeal of a rental. Look around at comparable properties to see what kind of a rent bump you'll expect.
Regarding flow meters, I'm not sure how you'd collect on that. I've never seen someone do their own submetering of water. Normally when someone wants to do something like that they'll implement a RUBS setup. It will probably be difficult to collect on unofficial meters, let alone evict based on nonpayment.
#1 Tenant Screening Contributor
- Property Manager
- Honolulu, HI
First, check the laws for your jurisdiction...not all allow charging tenants for water.
Submetering a multi unit will require either extensive re-plumbing or individual flow meters at each fixture, which will likely be costly.
You would need to wait until renewal of each tenants agreement to make such a significant change in terms, and likely with 30 day or more advance notice. However, once the terms are included in the agreement (and assuming you checked local law), there should be no problem holding tenants accountable.
It may be better in the long run to have annual plumbing inspections done to check for leaks. You should also ensure fixture stop valves are upgraded to 1/4 turn ball valves so they will function when needed if tenant notes a leak.
Here, condo associations have for several years had the capability to enforce "High Risk Component" inspections periodically, primarily to check for leaks or related failing components. They have saved many a homeowner from serious, if not catastrophic, damages by early detection.
HOW TO SHARE UTILITIES 101
You have a property with two or more units and the utility meters are shared. There are a few options.
1. Pay to separately meter the utility. This can be very expensive and is usually the worst choice to make because you can't justify the cost.
2. Charge the tenants a higher rent rate and include utilities with their rent. This is the simplest method, but it also means your tenants are more likely to abuse the utilities by leaving windows open with the heat or A/C running, leaving lights on, ignoring the toilet that constantly flushes on its own, etc.
3. Pay the bill yourself, then reimburse yourself by charging the tenants based on a formula. This takes a little more work, but it's the most fair and reduces the likelihood of tenants that squander utilities.
If you choose #2 or #3, there are considerations:
Start with an average. Use varies throughout the year. Heating costs go up in winter, as does electric due to the reduced natural light and people being indoors more. Electric can also spike in the summer with A/C. Contact the utility provider and get an historical average based on the last year of use. It won't be 100% accurate, but it will be close enough. I recommend you do this each year to adjust for utility increases and other variables. If your average heating bill is $150, you may not collect enough in the winter months when the bill reaches $225 but you'll collect extra in the summer when it drops to $65. If you base your tenant charges on the historical average, you should come very close to collecting the entire amount over a one-year period.
Charge a higher rate. If the water bill is $100 a month, increase the price by 20% (or whatever you decide is fair) to compensate you for the time required to split and bill and to cover additional use when tenants squander the utility. If the bill is $100 a month split between four units, increase it to $120 and charge each tenant $30.
How to calculate charges. Don't make it harder than it has to be. If you have four 2bed/1bath units with the same appliances, split it four ways and call it a day. You can make minor adjustments based on the type of appliances (dishwasher, clothes washer and dryer, air conditioning, etc.) and the size of the rental. If Apartment A is a 2bed/1bath with washer/dryer and Apartment B is a 1bed/1bath with no washer/dryer, Apartment A should pay a higher rate. Another option is to split the cost based on the number of occupants in each unit but this also means you'll need to adjust the charges as tenants move in/out, so it requires more work and I wouldn't recommend it. I recommend a simple spreadsheet to check your math and it will make it simple to adjust each year.
End the complaints. Tenants may complain about your method of calculating how much each unit pays. They think it's unfair because they only shower once a week but they can hear the upstairs neighbor showering twice a day. You can put an end to this by showing them an actual utility bill. Why? Because a large percentage of the charges are base fees that do not change based on use!
I just looked at a utility bill and it has a total charge of $184.12 but $116.50 is from base fees! If I divide this bill by four units, each tenant would pay $46.03. If they were separately metered, each tenant would pay the $116.50 base fees and their individual use, which would be 3x higher than what they pay when sharing a meter.
There are a lot of options out there, but don't make it more complicated than it needs to be. Tenants actually save money when using a shared meter, so there's plenty of room for error when calculating how to distribute the charges.
Good points. Especially how much they are saving by sharing and not paying base fees.