Two family house with only one electric meter

7 Replies

Greetings to the great BP community! I am currently looking at a two family house. I am planing to live in one unite and rent out the other. The problem is there is only one electric meter. How do I price out the rent to my tenant? A fixed rate added to rent every month? Or split half of the bill every month? Thanks BP !

you can do one of several things. you can include electric in the rent (not always a good option) , you can stipulate, in the lease, that the electric bill is split 50-50, you can implement RUBS which divides the bill into the percentage of space it takes up (for example one side is bigger so they pay 60% of the electric, or the 2 bedroom pays 66% and the 1 bedroom pays 33%), or you can submeter the electric which allows you to split the bill you receive according to the actual electric used, finally you can discuss with your electric company what needs to be done to add a separate meter to the duplex.

submeter and second meter are most expensive options, but in my opinion are the best for your long term sanity and profit.

Split the bill 50/50. Make plans to have a second meter installed.

It could be hard to have a second meter put in. It depends on how the wiring was done. It may be a lot of work to separate the wiring in the 2 units. So, I would evaluate that option in some detail before deciding to put in a second meter.

I personally wouldn't want the effort to manage splitting the bill each month. I would probably set a threshold based on past bills (which you can ask the power company for a 12 month average). If the bill goes over a threshold, then split it. So, hopefully it almost never exceeds that and saves you the hassle of dealing with collecting a separate payment for the electric bill.

@Jason Wu Separate billing for electricity is not allowed in MA unless you have separate meters or there is a written agreement with the tenant.

See MGL 105 CMR 410.354. Paragraphs A. and B. will answer your questions.

https://www.mass.gov/files/documents/2017/09/11/10...

Please don't take advice from those who do not own or rent properties in MA.  They mean well, but often give out genuinely bad advice, which may work where they have their rentals, but not here in MA.  

Remember, the Commonwealth is always looking for excuses to sue "evil" (i.e., ALL) landlords and there's no shortage of lawyers trolling for victims.

You don't mention the heat source for the house.  If it's baseboard electric heat and hot water, it's especially urgent to get this taken care of.

Either way, I'd find a way to get a second meter installed pronto.

Originally posted by @Charlie MacPherson :

@Jason Wu Separate billing for electricity is not allowed in MA unless you have separate meters or there is a written agreement with the tenant.

See MGL 105 CMR 410.354. Paragraphs A. and B. will answer your questions.

https://www.mass.gov/files/documents/2017/09/11/10...

Please don't take advice from those who do not own or rent properties in MA.  They mean well, but often give out genuinely bad advice, which may work where they have their rentals, but not here in MA.  

Remember, the Commonwealth is always looking for excuses to sue "evil" (i.e., ALL) landlords and there's no shortage of lawyers trolling for victims.

You don't mention the heat source for the house.  If it's baseboard electric heat and hot water, it's especially urgent to get this taken care of.

Either way, I'd find a way to get a second meter installed pronto.

 it should be a pretty general implication that any advice given should not be followed unless you can confirm it is legal in your state.

@Jason Wu those encouraging true separation are correct. It really is the only way to go (long term). In my county a tenant must have both thermostatic control of their space (meaning the landlady can't have the thermostat in her part of the house). They must also have 24/7 access to their breaker panel. If it is outside then that works. But if it is in the other unit then that doesn't work. This is a wise policy. 

Splitting the bill is not a great solution - there will be finger pointing over usage no matter what. 

Thank you so much for your detailed suggestions everyone! I will consider more carefully before I make the purchase. 

*additional question:

If my tenants are section 8, will the single electric meter issue have trouble passing their inspection? (assuming my tenants will agree with splitting the electric bill on the lease)

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here