Owners and managers of multifamily units have three basic means of recovering the expenses of water and other utilities from their tenants. They can add the cost to the monthly rental fee. They can also employ a ratio utility billing system (RUBS). Another method is to install water submetering devices.
What Is Sub Metering?
Sub Metering consists of providing each unit with its own meter. At a result, every tenant is responsible for paying for water he or she actually uses. While the system may initially be expensive, owners and even tenants favor it over several other systems. In fact, using sub meters offers tenants and owners several benefits.
Sub Metering Benefits
A sub metering system provides several remunerations. These include:
* Encouraging Water Conservation: Studies indicate that when tenants become aware of how much water they use and its associated costs, they will actually reduce the amount of their water consumption.
* Water Costs Reduction: With the implementation of a water sub metering system, the owner/management company can actually reduce costs since they are no longer reflected or incorporated in the monthly rental fee.
* Cash Flow Increase: According to research, the average return on investment (ROI) periods for installation of such a system is less than a year. This will help to decrease your net operating income.
* Increases Property Value: a water submetering system makes the property more appealing to potential buyers, therefore, increasing its market resale value.
* Rent Stabilization: In a competitive rental market, the implementation of a water sub metering system no longer impacts the owner is bottom line. He or she does not have to play catch up on the rental fees in order to maintain a profit. This allows owners to maintain the rent at a set price, stabilizing rental fees overall and making the units more attractive for potential tenants.
When an owner of a multi-unit property combines sub metering services with billing management and other utility-related services, it reduces costs for the owner’s administration of the same services.
Water Submetering: Saving Money and Water
The cost of water continues to rise. Owners who search for a way to reduce the rates and its effect on his income property can choose one of three basic types of recovery systems. While some may choose to include it in the rental fees, others opt for allowing tenants to handle the water rates on their own. To accomplish this, they hire a management company to install sub meters. By utilizing a water submetering system, owners and management companies can save themselves and their tenants’ money while reducing water abuse. In many ways, this is a win-win situation for everyone involved.