All Forum Posts by: Jedd Braunwarth

Is it a true duplex or a conversion? Careful as some areas they will require it to be finished as a single family if not a true multi. This just happened by Drake on a property.

@Dan Bosak full disclosure to start, I own a submetering company but am also a RE investor and have done both RUBS and submetering prior to owning the company. Wanted to chime in mainly in response with what @James Kojo mentioned above. He is absolutely right! Tenants are much more likely to pay the utility payments to you, landlord or property manager as they do rent. We offer both options where tenant can pay us or pay you but there seems to be a lot more late payers, non payers and just general chasing people to pay when they pay a third party. Highly recommend that they pay you as they do rent.

Finally, as for laws, every state is different but I think you received great advice already from your attorney. Most every state allows submetering, some are more strict than others such as CA, but all require that you cannot profit from it. What they mean by profit from it is charge above and beyond what the local municipality/utility charges. If you charge more then you become a utility provider in itself. If you charge the same or less you are not profiting from it, just passing the costs on.

@James W. Yes, our system is 100% automated. We monitor and bill apartment units in states all over the U.S. without ever going on site. We even have some in Ecuador! Our system comes with a private wifi network and cellular set up to log data. Basically a plug and play system. Send me a private message as I do not want to this thread to get to far off topic on our company as that was not my intent.

@Doug Karkow thought I would jump into give my input as I have actual experience with this since I own rentals in IA and MN as well as a submetering company. Lower rent rates and submetering or RUBS really is not an issue, most do not even ask what utilities cost per month, they look at base rent, as you mentioned. The issue I have seen with lower end units with submetering is it is  just one more payment they have to make and that you or another company has to collect. So, just as it is already with tenants, you pick a bad one and they will not pay, be late, never pay, make up excuses, etc. Lower end rentals, with my experience in submetering, just adds to collecting another payment. The flip side is when you do submeter these units the tenants are held responsible for the water and leaks are reported, they do not waste water, etc. Your water bill for your entire complex will come down significantly the first month you install water meters and pass the bill back to the tenants.

@John Smith, do you know if the plumbing is already separated for each side of the duplex? Is it a side by side or top bottom duplex style? The largest cost is obviously the plumbing alterations and if you can avoid them. If you can, the easiest may be to switch the water utility to your name, submeter both sides of the property and each tenant pay their usage to you based on the two meters. I think even submetering one side will cause tenant complaints, arguments, non-payments, etc. This happens even more with RUBS. Full disclosure, I own a submetering company but have seen it all happen because of this!

@Garrett Penfield sounds like its a decent deal. Can you raise rents if you update it? Who pays utilities? Also, even though it would cash flow less, why not put less than 20% down since you are going to owner occupy? You could probably put 5-10% down and save the rest for the next investment or repairs or both!

I think it sounds good. To me the boots on the ground handyman is the most critical in the deal. I'm not as long distance as you but have out of state property. I self manage myself still but have an awesome handyman that does everything. I submeter all of my units too. Basically I am doing what you are looking at right now and it's gone very well. The management and submetering is easy. Find a good handyman and don't let them go! 

Done

@Tyler Esparza I really have nothing to add but felt compelled to respond as I was just down in TX for work a few months back and went to the New Braunfels German Fest. It was fun! Listened to a solid polka band. Haha

@Weina Shi I did end up submetering as RUBS just did not seem fair to me. It was fine and works for many people and is cost effective. I also added coin operated washer and dryer so didn't know if I should take out a percentage for that and not pass that on. Of course I could have still passed 100% onto the tenants as they are the ones using the washers and dryers but isn't recouping utility costs part of the reason we go coin operated? I am more biased as after switching from RUBS to submetering I ended up starting my own submetering company. However, my experience with RUBS is what made me go down this path.