Sub Metering to Control Apartment Expenses

The Real Estate Espresso Podcast

Sub Metering to Control Apartment Expenses

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Sub Metering to Control Apartment Expenses

Welcome to the Real Estate Espresso Podcast, your morning shot of what’s new in the world of real estate investing. I’m your host, Victor Menasce. On today’s show, we’re discussing how to increase control over the expenses in your commercial and residential multifamily apartment buildings.

Some buildings were designed with a single electric meter and a single water meter. This setup makes it difficult for landlords to recoup the cost associated with these variable expenses. Other buildings utilize a RUBS method. RUBS, an acronym standing for Ratio Utility Billing System, is a technique landlords primarily employ in multifamily apartments to distribute the cost of shared utilities like water, gas, electricity, trash, etc.

Instead of each unit having its own meter to monitor individual consumption, the entire utility cost for the property is divided among tenants based on a predetermined formula. Common factors used in a RUBS formula might include the unit’s square footage, the number of occupants, or the number of bedrooms and bathrooms. Perhaps there’s a combination of these factors with varied weightings.

The problem with these methods is that tenants often wonder if they’re paying more than their fair share for utilities. Furthermore, tenants may never fully trust the monthly billing as being accurate. An alternative approach is to submeter each unit. By submetering, the usage for each unit can be determined, potentially saving a significant amount of wasted expense.

When considering submetering, it’s essential to think about where to locate the submeters, who will take measurements, produce the invoice, and collect payment. Choose a system that will integrate with your property management software. Looking ahead, you’ll also need to consider the technology’s lifecycle. It’s key to budget for spare part inventory that will last longer than the product lifecycle. Ultimately, the choice of a specific manufacturer will depend on the local trades in your market and their familiarity with installing and supporting these products.

The purpose of today’s show is to encourage you to look at prevalent solutions in your local market. Remember, there’s a lot of choice out there. Enjoy the rest of your day, make great things happen, and we’ll talk again tomorrow.