Multifamily property with shared utilities - help!

[Jessica Jay-Maleski]

Hi all!

I recently purchased a 4-plex (two buildings with 2 units per property) in Phoenix, AZ. Because the units are not separately metered in any way, I pay all utilities. I am finding that with each utility bill I have one fun surprise after another...and they are always higher than expected. The property was vacant until just a few weeks before I purchased it so we had very little to go on to determine what utility costs might be and of course we underestimated... such is life. Anyway, I wanted to put a few details out to the community to see if anyone has any suggestions:

1. Electricity bill is fairly high - each unit has window AC units (some units have 2). Does anyone have any tips or tricks as to how to optimize their function to reduce the bill, or even perhaps another suggestion entirely regarding HVAC?

2. Separate metering - any suggestions in this regard? Has anyone found that this is a cost-effective thing to do? My goal is to convert all of my units to government program funded, so this might not make sense since it seems as though most government programs require that the landlord pay all utilities anyway.

3. Has anyone had experience installing solar and have any feedback on whether this makes sense for a property like this?

In general, does anyone have any tips/tricks as to how to keep utility bills low in a situation like this where it is almost impossible to isolate where there may be an issue since there are not separate meters and therefore no way to tell which unit is using what and where a breakdown might be occurring? I plan to hold the property for 5 years at the very least so I'm not opposed to making up-front investments that will help my return over time and of course improve my numbers to maximize a sale price when I decide to sell it.

Any suggestions would be GREATLY appreciated!

[Michele Fischer]

There are a ton of posts about splitting the utiliy meters, most are proponents of moving forward with non-shared metering.

I don't have any experience with that.  It sounds like you might be in the lower income niche, which I do have a lot of experience with.  Some tips:

- Call the utility company to find out what the one to two year trent on usage/costs has been to help get an idea of appriate monthly costs.  Craigslist ads may help too if landlords often include utilities in rent.  Its important to understand what normal usage is.

- Send the tenants information and tips on how to lower utility costs.  Give them a sheet at move in and keep reinforcing it, especially when costs are high.  Help them tie their decisions to their costs or future increases.

- If costs are high, send out a letter saying you noticed a spike and that you will be scheduling an inspection to look for issues with the property, like leaks.  Reinforce they should report things.  They may also report things they or their neighbors are doing, like filling kiddy pools.  Pools should be prohibited in the agreement.

- Where you can get utilities seperately metered, offer annual rebates if they keep their utility costs low, and annual increases for utility costs above average.  Tie their usage to their rent.

Best of luck!