Sub Metering to Control Apartment Expenses

The Real Estate Espresso Podcast

On today’s show we are talking about how to gain additional control over the expenses in your commercial buildings. Some buildings were designed with a single electric meter and a single water meter.

This makes it difficult for a landlord to recoup the costs associated with these variable expenses. Some buildings use a RUBS method. RUBS is an acronym which stands for Ratio Utility Billing System.

Instead of each unit having its own meter to measure individual consumption, the total cost of the utility for the entire property is divided among the tenants based on a predetermined formula.

The problem with all of these methods is that the tenant is left wondering if they are paying more than their fair share of the utilities. If the landlord is watering the grass, then they wonder if the tenant is paying for excessive watering rather than their own direct utilization. It ends up being an irritant to tenants who never fully trust the monthly billing as being accurate.

The other approach is to sub-meter. The building owner still gets a single bill for water, and for electricity. But by sub metering, the actual usage for each unit can be determined.

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