Separating Utilities Among Tenants

Member since 2022 · 25 posts · 8 votes

Good evening everyone,

how do I separate utilities when I have an ADU that is rented with a fixed utility price? I am currently living in the main house, but will soon be moving in the upcoming summer due to another purchase. Should I hire a contractor to add an additional meter that separates the ADU from the main house or charged another fixed amount for the main house as well. I want to make the best decision with saving the most amount of money and reducing future headaches moving forward. Thank you in advance for your response and taking the time to address my question.

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Nathan GesnerBusiness Member

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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

Quote from @Jazzous Anderson:

If you can afford it, separating the utilities and making tenants 100% responsible is the best option.

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
2y
Quote from @Jazzous Anderson:

If you can afford it, separating the utilities and making tenants 100% responsible is the best option.
The DIY Landlord Book4.7248 Reviews
Website View Page
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Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
2y
Base things like heat on the relative sizes of the units and water on the number of people living there.
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Marc Winter
Real Estate Broker · Northeast PA · Member since 2017 · 2k+ posts · 2k+ votes
2y
Making tenants 100% responsible as @Nathan Gesner posts is spot on.
However, you are looking at separate electric and water metering, maybe gas too? Who will be reading/servicing those meters? Check with each utility to confirm you can have the additional accounts in a tenant's name.
In our North East Pennsylvania location, the water companies will allow a separate meter, HOWEVER, they require a separate water main from the street hookup to the additional house meter so they may control each meter on the property independently of the other(s) without entering the dwelling. That can get pricey.
Other than that, with only one meter, the owner will have to pay for both houses and build that into the rent. I would never pay for any tenant's utilities: what is free is too often wasted. How do I know?  I remember a tenant who decided it was easier to open a window than lower the thermostat in winter. Ouch. Or would not bother to report a leaky toilet flapper. Ouch ouch.
Good luck, and keep moving forward.
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Jazzous Anderson
OP
Member since 2022 · 25 posts · 8 votes
2y
Incredible, this feedback is certainly helpful and I will analyze the pros and cons for both. I am totally understanding the phrase, what is free is often waisted because the tenant is not frugal when it comes to utility usage. Thank you all for your prompt reply and in-depth explanation. I love this forum message group, I will be posting more questions in the future.
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Melanie P.Pro Member
Rental Property Investor · Member since 2023 · 1k+ posts · 922 votes
2y
In Riverside you'll have to install a panel and meter on the ADU. Is there gas service to the ADU? Going all electric will probably be cheaper than trying to meter the gas. In Riverside you cannot estimate or allocate usage based on square footage or number of occupants on gas or electric, but you can for the water. Just divide the total bill by the total number of occupants and bill each for their water usage. Include a copy of the bill and your RUBS policy when you invoice.
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Jazzous Anderson
OP
Member since 2022 · 25 posts · 8 votes
2y
Thank you for that insight, if you where in my shoes, what course of action would you take and why?
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Melanie P.Pro Member
Rental Property Investor · Member since 2023 · 1k+ posts · 922 votes
2y
I would institute RUBS for the water and make getting the power split up a priority. Statistically tenants use 30% more utilities when they are included in the rent.
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Tim J.
Investor · Vermont and New York · Member since 2023 · 308 posts · 309 votes
2y
Quote from @Theresa Harris:

Base things like heat on the relative sizes of the units and water on the number of people living there.

This is a recipe for problems. To the OP - DO NOT do this.
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Melanie P.Pro Member
Rental Property Investor · Member since 2023 · 1k+ posts · 922 votes
2y
Quote from @Tim J.:

Quote from @Theresa Harris:

Base things like heat on the relative sizes of the units and water on the number of people living there.

This is a recipe for problems. To the OP - DO NOT do this.

Indeed, In the OP's jurisdiction the only utility that can be divided between tenants without sub metering is water (Riverside, CA).
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Erick Salvatierra
Member since 2024 · 11 posts · 1 vote
2y
Hello Jazzous, have you decided on submetering or RUBS?

I've recently started building a software application because I think there is an issue with potential earning lose due to overlooked measures in utilities. Specifically around efficiency in devices when not maintained and challenges with realizing potential earnings with device electrification upgrades. We have a solution if transparency in unit / appliance use is an issue.
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Jazzous Anderson
OP
Member since 2022 · 25 posts · 8 votes
2y
Quote from @Erick Salvatierra:

Hello Jazzous, have you decided on submetering or RUBS?

I've recently started building a software application because I think there is an issue with potential earning lose due to overlooked measures in utilities. Specifically around efficiency in devices when not maintained and challenges with realizing potential earnings with device electrification upgrades. We have a solution if transparency in unit / appliance use is an issue.

I would love more information. I have been able to get a submeter on the electricity but will have to do RUBS for water and cover gas as I don't think RUBs is allowed for gas in Riverside county.
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Melanie P.Pro Member
Rental Property Investor · Member since 2023 · 1k+ posts · 922 votes
2y
Quote from @Jazzous Anderson:

Quote from @Erick Salvatierra:

Hello Jazzous, have you decided on submetering or RUBS?

I've recently started building a software application because I think there is an issue with potential earning lose due to overlooked measures in utilities. Specifically around efficiency in devices when not maintained and challenges with realizing potential earnings with device electrification upgrades. We have a solution if transparency in unit / appliance use is an issue.

I would love more information. I have been able to get a submeter on the electricity but will have to do RUBS for water and cover gas as I don't think RUBs is allowed for gas in Riverside county.

If you are in Riverside, CA you can only use RUBS for the water bill. Google RUBS for service providers and policies. You'll have to add it at lease renewal and you'll need to ensure that adding the water plus any other increases you are planning does not exceed any cap on rent increases in your jurisdiction.
Water is easy - bill divided by total occupants at property (count everyone even children) then for each unit multiply the result by the number of people living there.
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Erick Salvatierra
Member since 2024 · 11 posts · 1 vote
2y
Quote from @Jazzous Anderson:

Quote from @Erick Salvatierra:

Hello Jazzous, have you decided on submetering or RUBS?

I've recently started building a software application because I think there is an issue with potential earning lose due to overlooked measures in utilities. Specifically around efficiency in devices when not maintained and challenges with realizing potential earnings with device electrification upgrades. We have a solution if transparency in unit / appliance use is an issue.

I would love more information. I have been able to get a submeter on the electricity but will have to do RUBS for water and cover gas as I don't think RUBs is allowed for gas in Riverside county.

Hi Jazzous, thanks for reaching out. If you're dealing with water submetering, I would check out DrizzleX
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Jake KnightPro Member
Property Manager · Indianapolis · Member since 2017 · 303 posts · 146 votes
2y
Quote from @Nathan Gesner:

Quote from @Jazzous Anderson:

If you can afford it, separating the utilities and making tenants 100% responsible is the best option.

Agreed but this can be expensive. If you can't do this, you can inflate the rent to include utility charges or just do flat-rate billing. You may just take an average and come up with a fair number. You'll want to be careful to not price your way out of the area.
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