my father has been  a landlord for 20 years in detroit so i get to hear all about them since ive been around1 self employed people they  always fail to pay on time and leave dirt everywhere to be cleaned 2 those who turn into a life of crime and decide the unit is either a great place to distribute narcotics meth and other dangerous substances or worse they decide its a perfect place to produce drugs having the fbi lock down the unit and investigate my father this has happened 5 times now3 have had two units completely scrapped and i mean interiors gutted, copper pipes ripped heaters boilers even the shower and toilets stolen, these skin heads even tore threw the walls to steal all the electrical and hvac, needless to say they costed tens of thousands 4 one tenant decided it was a cool idea to pay for one month, then strip the entire location. once the tenant was evicted the house was burned to the ground. no charges were ever given .5 worst of all is when people die. once a drunk driver in a pickup truck drove right into the living room and killed not only himself but the tenants watching tv in the room, weve also had about 3 that i remember who we found laying dead from alcohol poisoning, the last one we payed to be sent and burried near his family  also we once had a witch doctor, this old lady disappeared after renting for a year. when we went inside the walls were covered in blood, there were rotting animals that had been cut open, candles and wax stuck all over the place. 

Have you tried looking into capital type projects that will help reduce energy consumption (LED light fixtures for example)? 

There are still some issues to think about when sub metering.  1) you still need to get the tenants to pay a bill that they will always say they did not use that much. 2) you have to read the meters every month. 3) if someone chooses not to pay you do not have the right to shut their power off. ( this one may be different by location.)  4) in this property two of the units share circuits so you can not get an accurate measurement of power consumption. 5) to sub meter you will have the same or close to the same cost as seprate metering will cost because you will need to have a panel for each unit and a product called emon demon which can cost more then a residential meter panel and if you sub meter with a meter panel you might as well just allow the power company supply the tenants with meters.

The main issue is most have mental illness, alcohol and/or drug problems.  

We also provide the tenant with an electronic copy of the utility bill so they can monitor their resource consumption.3) Every three months we reconcile the amount paid into the fund against the actual amount paid for utilities & services.  

I think you and I both know that most student loan money really goes toward paying rent, alcohol, and food... 

Now, if your plan were to live in half the building (the smaller unit) and use the larger unit as a mortgage helper, you would look at things through a different lens.I am a big proponent of improving the energy efficiency of older buildings, but am not found of carrying the utilities - I like everyone to be responsible for their own resource consumption.  

It can be an addiction like alcohol or crack.

My experience (in buying several severely mismanaged properties) is that the owners will likely have equally mismanaged tax records (eg; all investment activities lumped together, etc.).My due diligence for an area that I'm "blind" to (have never worked in before) would roughly be as follows:-Speak w/ local realtors & property managers to determine appropriate market rent for all units-Get copies of all leases to verify current rent roll-Speak w/ my insurance agent, get appropriate quotes-For any utilities I'll be responsible for, find out local market rate for electricy/gas/water & sewer and use what I know to be "average" consumption for those services-Use estimates I know are sound for maintenance/capex reserves, etc.

Also it gives them a feeling that they are in control if how much their rent raise is, since it it based on consumption of water by them.