Splitting the water meter, is it worth it?

Question

Hi All,My water company called out of the blue to have the water meter replaced; they are planning to replace all the meters in my neighborhood as part of their upgrade cycle. I figured this could be a a good opportunity to separate the service, but I am unfamiliar with the cost. Does anyone have experience doing this during an upgrade cycle / off cycle? I'm looking to get a better understanding of what this could cost and whether this makes sense to pursue?I just purchased this duplex, in Northern NJ, as a house hack and my rental unit is about to go on the market. I'm willing to absorb the vacancy for a little longer if this would make sense to pursue.Thanks!

Joe Splitrock · Answer

@Christopher Lim the first question to ask it whether they can be slit. You will need to make sure that there is two completely different plumbing systems. If the property was converted to duplex, odds are good the pipes are not split 100% and it may not even be possible to split.

Odds are good there will be a connect fee that could be hundreds or thousands of dollars. It could be worth it, but figure that into your decision.

Another consideration is who is responsible for the water bill, tenant or property owner. In some cities, if the tenant fails to pay the water bill, the city can put a lien on the property. I have seen situations where a tenant moves out after a year not paying a water bill and the landlord is stuck with a huge bill. If you are going to be stuck with it anyways, you are better off including it in rent and paying it yourself along the way.

Final thing to consider is that splitting will result in higher cost. Water/sewer have a base charge so when you split to two, most likely the two bills will be more than just one combined. Maybe you don't care if tenants are paying but increasing the cost to operate the property could be an issue.

Lam N. · Answer

No, not worth it.  The most expensive part is you have to install a new water line from the street meter into the house.  This meant digging up the ground between the street meter and the house.

The best way to deal with this is charge them an additional fee for the water.  I do $100 for mine.  So, in the lease it would look something like this.

Christopher Lim · Answer

Thanks everyone for your responses, based on all the incite it seems like it most likely will not be worth splitting the cost. I'll be letting the water company solely upgrade my water meter.Most likely, I'll be following @Lam N. 's lead by including the cost of utilities into the rent itself. @Joe Splitrock it didn't even cross my mind that my property can have a lien put on it due to a tenant's non-performance. It's a very good point and for that alone, not worth the risk. Really appreciate your thoughts.

Aigo Pyles · Answer

I think water meter installation done by water company is quiet expensive. If you really want to put water meter in each unit, you can try private submeter. You have to read it monthly and bill accordingly.

Johann Jells · Answer

Common utilities like water or even heat need a change of thinking. Your cost isn't the bill. It's the difference between the bill and what you build into the rent. I have a 4U with a steam boiler, the expense of ripping out that whole system and building 4 separate heating systems is many, many times what I may lose in the error between the 2 numbers, if there is one.

Lam N. · Answer

Easier said than done.

As an investor, I don't just look for good deals.  I don't even look for great deals.  I look for highway robbery where I'm the robber.  These properties don't always come with meters already split.  And I'm not going to walk away from a highway robbery deal (again, I'm the robber) just because the meter ain't split.

Case in point.  I recently bought a 5-apartment building.  The old couple I bought it from has had it for 15 years or so.  They were in financial distress and they got problem tenants there.  They were this close to having this place foreclosed.  And since no one is buying at this time, they couldn't get rid of it.  I told them whatever they still owe on this property I'll pay that much cash TODAY.  They could walk away from all their problems with their credit intact.  Also meant they would lose all their equity.  They very happily agreed.

That building only had 1 meter.  I wasn't going to walk away from this deal just because the meter ain't split.

I very quickly got rid of all the existing tenants and got new ones.  I jacked up the rent to market value + water.  I just blanket charge $100/apartment.  It is now one of my best performing investments.  Tenants are paying every month like clockwork.  And water bill for that building has consistently hover around $150, so I got plenty of cushion room.

My point is non-split water meter ain't an issue if you know how to deal with it. Don't let something so trivial deter you from deals.  Aim for the forest, not the weeds.

Will Barnard · Answer

Good point on property managers, they do suck, mostly.

I think for someone wanting 50+ doors, they should be looking at acquisitions without meter splitting issues to begin with, solves that problem. Having just a few is no big deal per my point above.

Lam N. · Answer

All good points, of course.  Just that from my point of view it's just another thing to worry about.

I am very careful with who I choose as tenants.  The tenants that I retain don't abuse.  For example, I  have a 4 apartment building all have 1 water meter.  That's how it came as when I bought it.  The water bill for it has never exceeded $200.  Not bad for 7 adults.  And they have all paid rent like clockwork.

Yes, I've had tenants that abuse.  I've had one that ran the water bill up to $400 in one month.  I gave them a choice: they pay $300 out of the $400 for this water bill or I am not renewing their month-to-month lease.  Bill never exceeded $120 after that.

What I'm trying to say is there are methods to dealing with abusers without introducing headaches like putting in 50 submeters.  And since my properties are all over the metropolitan area (I don't just buy properties in one local area), having all those submeters would very quickly turn into a big pain in the ass for me.

Oh, and property managers suck.  I will never use one ever again.

Will Barnard · Answer

Appreciate the honesty, I will reciprocate. It takes about 30 seconds to read the meter and another minute to calculate the math to bill it. Tenants notoriously abuse water when they don't have to directly pay for it. That is a fact landlords know too well. Secondly, as a professional landlord looking to own 25 doors, it would not be recommended to buy 25 doors all of which with this same issues, separating meters to bill water! The truth is, perhaps you have a few or even 10, and most likely, with that quantity, you have other rentals and as such, likely have a property manager to do these tasks for you.

So why would you want to do a lump sum utility when you have the easy ability to separate and bill the tenant for their exact usage!

Lam N. · Answer

Just remember this.  When you advertise for the place, always tell them the price to take up residence plus utilities (water).  Don't just tell them the price that already has water included.  Because that is all they can think about.  And then they will compare your price with places that don't already include water.  So, say you want to charge $1000 just to live there plus water, tell them the place is rented for $1000 plus utility.  Then in the lease, do what I showed you.  Have a line that spells out how much to take up residence and a separate line to charge for water.  Trust me, it makes all the difference in the world.

Another thing is don't follow some of the advices on here of installing a submeter to charge them accordingly.  Think about it for a second.  Do you really want to go around and read every submeter every effing month from now to infinity?  Don't become one of those landlords that nickel and dime everything.  If you can't get past the insignificant details, you will never be able to see the big picture.  You can't plant a forest if you get too distracted by a bush or a leaf.

So, just figure about how much it costs for water and charge them that.  If they end up using significantly more than what you figured, inform them that you are upping that portion of the charges to reflect how much they use.  But for the love of god, don't become one of those landlords that nickel and dime everything.

10 years from now when you have 50 units, are you really going to be going around reading 50 submeters every effing month to charge each one accordingly?

Splitting the water meter, is it worth it?

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