Splitting shared utility meters on 18-unit

[Jake Hart]

Wanting to get some ideas on splitting utilities between tenants. I’m purchasing an 18-unit mixed used property which consist of 12 residential and 6 commercial (industrial) units. This property is unique as it was originally separate buildings that were eventually combined and then slowly converted some of the space into residential living space. I’ve looked into splitting the meters, but it would cost a significant amount of money and time and really wouldn’t make sense financially right now. We always have the tenants’ pay utilities at our properties and switch into their name, if at all possible, but for this one it won’t work. Here is my idea that I’ve seen work for a very well know shopping center management company that purchased the utilities then billed back their commercial tenants. My thought is to try and come up with some kind of formula based on sqft, bedroom, bathroom, and # of tenants to get an average percentage of consumption per unit, then bill back based on that math. It won’t be exact, but I assume I could get close within reason. I would then just bill them back on a professional looking invoice detailing the amounts. The good thing about this property is its insulated so well that everyone gets some benefit of the others heating/cooling. I have thought about including the amount in rent, but for my area, I don’t want to scare someone away over $1,000 rent w/ utilities included vs $775 rent w/ tenant paying utilities. They both would be $1,000 a month but I have seen individuals stray away just on how its advertised. Also if utilities are included then it would be more or less a budgeted monthly utility billing and I would definitely want a true-up at the end of their lease year. I could just see this getting a little messy. Just looking to get some more ideas or thoughts on this before I decide. Thanks in advance everyone!!