How to split the water bill with only 1 meter?

Question

Hello all!

Thank you in advance for your time, advice, and experiences!

We recently purchased a property in Wisconsin with 6 units— 2 commercial and 4 residential. One of the commercial tenants is a hair salon, and one of the residential is a 3 bedroom with a large family living there, the other 3 residential are efficiencies.

The building was built in 1898, and has only one water meter. It is city water/sewer which costs roughly $2,250 per year. We are looking to split the bill between the tenants, but do not have an accurate way to know how much water each unit uses without sinking lots of money into re-plumbing it all.

As the property owners, do we have the right to decide who pays how much percentage on the water bill? With the hair salon and the large family, it seems only fair that they would pay a larger percentage of the water bill based on assumed consumption versus the single person living in the efficiency... ie, have the salon pay 25% of the bill, 3BR 20%, other commercial 25%, and each efficiency 10%? Or, is the only option to split it equally among all 6 units?

Has anyone else ran into this problem? Any suggestions?

Thank you again!

Gene and Leah

Marcus Auerbach · Answer

@Gene Baldwin you can buy a water meter for as little as $40, but then you have monthly administartive costs to actually go and look at all the meters, which may not be accessible. A wifi enabled meter like Moen Flo is about $500 - times six. How much can you really save? As long as the water expenses stay within a range you don't have a problem, you need to fix. Just increase the rent a little and monitor overall consumption and let the tenants know - maybe post the water bill on the hallway as an FYI. If it's not broken, don't fix it.

I would say your time and focus are better spent on other things - like finding another deal!

John Teachout · Answer

With unsplit utilities, in my opinion, raising rents to cover it is going to be the least distasteful to the tenants. If you assign a percentage, then an unusually high usage by one tenant gets billed to the others.

One thing to keep in mind is that if people aren't directly paying for water, they have no incentive to "conserve". So doing regular inspections for dripping faucets and leaking toilets will be important. A running toilet can go through thousands of gallons of water in a short time.

Theresa Harris · Answer

It might be easiest to incorporate it into the rent adding a buffer in, so if normal rent is $1000 and water/sewer is $50, charge $1075 including water/sewer.  Otherwise, determine what the commercial tenants pay (more would be paid by a salon due to higher usage) and residential.  For the residential tenants, go by number of bedrooms.

Jeff Cichocki · Answer

@Gene Baldwin you can split the bill based on the percentage of the rentals. What you can't do is profit from the utilities directly. If the annual bill is $2,000, you can't collect $2,500 for utilities (direct profit on utilities is not permitted). However, if you raise the rent enough to cover  the $2,500 (i.e. It's now included in the rent) it costs, that's allowed.

Peter S. · Answer

For the residential split, it should be apportioned by headcount. Not sure how you would count the commercial side, as I have no idea how much water a hair salon would use as opposed to a residential unit. But the overall bill is not too terrible, so I cant see any one tenant paying a disproportionate amount.

Aarron Light · Answer

Add a water usage charge on top of the monthly rent when you renew your contracts. Water is cheap! Just charge the hair salon the balance of the bill after you back out the residential use. A family of  2 - 4 usually uses on average 3,000 - 5000 gallons per month if they have a washer. Unfortunately for you, there is no incentive to conserve on the tenants part. So, it's up to you to make sure (as someone commented) and inspect your property regularly, mind your meter and check for leaks.

Anthony Rosa · Answer

One meter for all the rentals and you want to divide the water bill according to what you think they each use.  I don't think that will work and you'll probably have issues over it.  Everyone will say that they use the least amount of water and you have no way to prove otherwise.  The only way you can bill separately is if each tenant is metered separately or its a SFH.  Include water in the rent and adjust accordingly.

Lizzie Carver · Answer

One tip--if you end up including in the rent, make sure you've looked at a few years of monthly charges so you're familiar with how it may fluctuate and come up with the right # the first time.

Gene Baldwin · Answer

@John Teachout good points also. Thank you.

Gene Baldwin · Answer

@Marcus Auerbach @John Teachout @Jeff Cichocki

Thank y’all for your input and info. We are trying to figure out if we should charge for water/sewer, or raise rents. Thanks for the ideas!

How to split the water bill with only 1 meter?

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