Add 2nd water line duplex cost?

[Josh Engen]

Hello fellow BP members!

I am a part owner of a duplex in Olympia, Washington and we invest in the Tumwater, Lacey and Olympia areas. 

There is currently only one main water line and we are considering adding a 2nd meter and a 2nd water line. 

These are the costs for the city:

water meter install deposit (the cost the city charges to install the new water meter): $2,500 deposit although the city thinks it will be closer to $2,000. 

1 inch water meter: $438

General Facilities Charge: $4,683

Total cost of the city equals approximately $7,121

Plumber contractor cost:

cost to run PEX line from new water meter city will put in, into the crawl space. Distance is about 100 feet. Plumber will also add water shut off and box near entrance of crawl space. We will be digging the trench ourselves so that cost is not included contractors pricing. Total cost equals $1,750. 

Cost for plumber to modify plumbing in crawl space using pex: $5,000. Includes largely replumbing one side of the duplex with minor changes on the other half of the duplex. Basically involves capping some lines and extending others. No fixtures are being replumbed, just up until the point where the pipes enter the subfloor of the crawl space. 

Total cost of project equals $7,121 + $6,750 equals $13,871 (approximately)

We have checked and there is no way to reduce the cost to the city. So my question is about the plumbing contractor cost. 

Does this price seem reasonable given the scope of work? Plumber estimates it would take two 6-8 hour days for him to complete this in case that would make a difference. 

Does anyone have experience doing this project and was your cost similar? Any general advice?

It would be awesome to hear from others who have experience with this sort of thing. If not, hopefully this information will help someone else out who may be considering doing this project or something similar. 

Thanks and all the best!

[Nathan Gesner]

Quote from @Josh Engen:

I can't speak to the cost because there are too many variables.

What's the benefit? Let's say you spend $100 a month on water and you eat that entire cost. It would take 130 months or almost 11 years just for you to break even!

It's actually worse than that because you'll be adding base fees to the cost of 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 you separate the water line, it will double the base fees and you or your tenants will be paying significantly more than what you currently pay.

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!

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.