Utilities not separated.
Hi Everyone,
I was looking at a multifamily property in the Pittsburgh area, trying to run it as a MTR/ STR but the utilities are separated. Trying to see what my options are on how to split that or finance it in. any help or knowledge would be appreciated.
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- Real Estate Agent
- Cranberry Twp
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Hi Lora. Are you saying you want to figure out a way to pass the cost of utilities onto the tenant? If so, you can do a few things. You can rubz the utilities to share the bill, flat fee the utilities, or submeter. Hope that helps a bit!
- Elise Bickel Tauber
@Lora Sitler, if you are renting short term you would be including the utilities in the rental price so I don't understand why you would split them. Even with a mid term rental I suspect its more common to include utilities.
To get a budget, I would start by contacting the utility company they would be able to give you an average cost based on the previous years usage and likely offer a budget billing option where the monthly payments would stay fairly level and just readjust periodically.
To split utilities depends on a lot of details and is often fairly expensive. There are options to "effectively split" some utilities like water by installing submeters and billing back each unit based on their own usage but again I'm not sure you need to do that if you are doing short term rentals.
Thank you for your response i guess i was looking to see if i went the long-term route for a rental how I would figure that out.
- Real Estate Agent
- Cranberry Twp
- 198
- Votes |
- 384
- Posts
Hi Lora. Are you saying you want to figure out a way to pass the cost of utilities onto the tenant? If so, you can do a few things. You can rubz the utilities to share the bill, flat fee the utilities, or submeter. Hope that helps a bit!
- Elise Bickel Tauber
Do you mean they are not separated? Either way the utilities are your expense.
Yes I understand at the end of the day that is my expense. They aren’t submetered for the property currently. I wanted to figure out how to split the utilities for tenants between 3 units
I’ve gotten really good at separating utilities on the low end. Boilers are very simple with duplexes, just trace the lines in the basement to the one apartment and disconnect them. Then I wire up electric baseboard heating. Everything in on YouTube on how to do it. I use dual 20amp breaker with 12/2 wire and you can add up to 3840 watts per 20 amp breaker dual pull. The instructions come with the heaters how to wire them up. It just costed me 2500$ for 3 panels/wire/thermostat/heaters/etc and we paid an electrician to install a 3 gang meter base outside for 3000$.
The water/sewer is the tricky part.
Utilities can be separated and there are RUBS (Ratio Utility Billing Systems) out there that will bill back a proportional amount to each tenant, but these are typically not worth it for smaller number of units.
I would either add a flat utility fee (based on floorplan type) if your local laws allow it or look into bundling it in the rent. What is common with your competitors? What is the ROI for any alternations you try to make?
If purpose built its not too bad, you can hire each trade and get bids. Gas can be tough so usually you leave that alone and make the heat for the other units run off of electric.
If it is a former SFH don’t even bother. It’s going to be a mess. Just include it in the cost of the rental to the tenants. You can charge a fixed amount if you want to do it separately you just have to be able to prove its reasonable.
Usually we charge $50-100 more per utility included. Water and sewer combined as “one” in this case. Water and sewer are typically included in rent though, so when you see “market rent” or comparable rentals you need to know that it usually includes that.
That usually underbills it but makes up for most of it.
I assume this is without permits?
With permits, I’m a license/insured contractor/home inspector/hvac. I started learning everything 10 years ago and started with YouTube.
Not bad then.
I’d hesitate to have a newbie wire baseboards though. Maybe start with a couple light fixtures haha.
Only way to grow faster is to learn how to do it yourself and become certified. We’ve acquired 32 doors in 2 years following the brrrrr method and doing everything ourselves. Having to pay contractor rates would cost too much.
Ya I agree I’d definitely start out with something less complicated.
When it comes to real estate, there's no substitute for learning and becoming certified in the brrrr method. We've personally grown our portfolio by 32 doors over the past two years without contractor rates eating into our profits. Becoming certified has been a huge help in growing faster and staying ahead of the game. Not only that, but it has enabled us to take on bigger projects with more confidence knowing that we have the skills necessary to succeed. It's well worth investing time and effort into becoming certified to reap the rewards when it comes to increasing your real estate portfolio.
- Real Estate Agent
- Cranberry Twp
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Rubs is short for ratio utility billing system. We have it as part of our property management software however there are rubs software availanble online through many sources.
- Elise Bickel Tauber
Thank you! I had never heard that term before now! Appreciate it!
Rubs is great and a cheap option but is not the only option and not legal in all States, most importantly they continue to make RUBS illegal slowly but surely. Also most tenants are not thrilled to know they are paying for the entire properties usage, no matter how little or much and sometimes is not worth the savings. You usually would charge back base off square footage, # of tenants, or # of rooms.
Another option would be to install submeters for all your utilities and I know from experience that you can have a water, electric, thermal, or whatever utility you are wanting to bill to your tenants, and use a platform like Meterconnex to enable billing from all submeters directly into your billing software. You then include the charges in your rent and collect directly from your tenants and continue to pay the city bill. Tenants pay %100 percent of the bill and you know exactly who is using what, not to mention the leak detection and high/low usage reports to have complete control of your properties finances. I would be happy to speak to you more and point you in the right direction.