implementing RUBS ???

Question

Good Afternoon BP! So I just got my first multifamily property under contract. Its currently a triplex (3/2, 2/1, 1/1). The 2/1 and 1/1 are both rented out with longterm tenants on a month to month basis and below market rents:) I have enough space in the 3/2 to convert to fourplex if I so choose but I haven't made that decision just yet. The previous owner was actually living in the 3/2 but has since moved out. She stated that since the structure was built right on the property line the utility companies stated they would not be able to separate the meters.

Utilities are broken down as such: Owner pays water apprx $120 monthly : Tenants split electric/gas $300 monthly

I say all of that to ask, Are there any companies that install the RUBS system here in San Antonio on such a small scale (2-4 units) ? Any local property management companies with expierence working with these companies or their software?

Ryan D. · Answer

I advise you do not roll utilities into the rents - have rents & utilities be separate charges. There are several advantages here: you can advertise the actual rent, rather than the higher rent+util number when marketing your property, which makes it more attractive. Put it in the lease that the utilities are a separate charge, & that all monies collected will first go to paying utilities charges, and then to rents - in many areas you can not evict a tenant for not paying utilities. This way, if a tenant decides to stiff you on the utilities bill, the way you apply their check will have them underpaying rent, for which you can evict. You can also put it in your lease that the utilities charge will adjust on an XX month basis. This allows you adjust the utilities charge every so often based on your actual bills, where as if you rolled them into the rents, you could only charge this at the end/beginning of leases. In some areas, you can not charge tenants more for utilities than you are actually paying the utilities company, so we aware of relevant local laws. In practice, with such a small building it is practical to just take your average utilities bill over the trailing 12 months, divide by the number of people living there, & bill accordingly each month.

Joanne Szewc · Answer

I have stopped charging tenants for water seperately, except when acquiring a building and their current lease states. I have found it cubersome to manage and it is so much easier to include into rent by raising rent rate with avg of last 12 months. If you need to figure out the last 12 months for a property, the water utility company can provide.

Kenneth Williams · Answer

@Joseph Weisenbloom Thanks for the reply. You’re absolutely right. After doing more due diligence I decided that it was not the headache To sub meter the property. Instead I decided to roll the utilities into the rents. Thanks again.

Joseph Weisenbloom · Answer

@Kenneth Williams Doing anything with CPS or SAWS is a nightmare in my opinion. They know that this is a way for investors to increase returns so they make it very expensive to add meters. They look at investors as these rich people that they can take advantage of. Even the amount they charge for monthly service is much higher for properties with 2+ meters. Keep in mind if you add a submeter system that is not an official SAWS or CPS meter you will need to find a way to charge the tenant for their usage. Your honestly better off saving yourself from paying electricians, plumbers, SAWS, CPS etc and just rolling the utilities into the rent.In other news SAWS continues to be making money hand over fist buying up 8 million dollar buildings and charging customers like we are still in a drought. http://www.rvk-architects.com/work/projects/san-an...

Kenneth Williams · Answer

@Michael Guzik You're right I need to check and see what the standard is in that area. From there I will reach out to CPS depending on what response i get from the other landlords.

Michael Guzik · Answer

@Kenneth Williams Congrats brother that's freaking awesome! I think I know which triplex you are talking about and was looking at that deal a while back, glad you were able to make it work for you! I may be wrong but when I was with my PM company we simply called CPS and asked about it and they took care of it on our duplex's. It's just simply contacting them and writing a check, but that check ain't cheap depending on a multitude of variables. Good idea on implementing that system but you also need to check that area and rentals around it to see if tenants are being billed individually like that. It may be a wise investment on paper but if you are the only one billing tenants like that in your area that could be a red flag.... I know it's a pain in the butt, but you need to reach out and call CPS and let them know of your situation and go from there. Good luck!