“There’s no shortage of remarkable ideas, what’s missing is the will to execute them.” Seth Godin

Today we are discussing submetering of water meters. SUBMETERING, according to Wikipedia, is a system that allows a landlord, property management firm, condo association or other multi tenant property to bill tenants for individual measured utility usage. The approach makes use of individual water meter, gas meters or electricity meters.

How does that affect you? Well, your property most likely has a MASTER WATER METER, which shows the total water usage for your building and is the basis for your monthly bill. The same can be done with gas and electric meters, but since most buildings already have individual gas and electric meters and most have a master water meter, we are going with water meters.

BOTTOM LINE I knew a gentleman who owned a 12 unit building consisting of 2 and 3 bedroom units. He installed submeters for water and with individual electric and gas meters, had virtually no utility expenses (except trash) for the several years he owned the property. Will this work as well for you? If it decreases your utility expense, it will INCREASE your gross scheduled income and should create additional value. It also may cause tenants to conserve water, which would save them money. It is something worth looking into, as a 2018 law (SB7) requires new construction of multi unit buildings to include submeters., so this is something that will probably become more commonplace.

RUBS The RATIO UTILITY BILLING SYSTEM looks at the total cost of water in your building and bills a percentage to each unit based on square footage, number of occupants and sometimes the bedroom count. This has been around for a while and could create an uneven bill for a tenant who over-uses or under-uses water.

SUB METERS There are a number of companies, such as NES, ADDA and INTELLIMETER who sell and install actual sub meters on your property. Most of them even offer meter reading and billing services, so that you don’t increase your workload.

COST The cost of the sub meters can run from 30 to 500 dollars per meter, and 200 to 500 dollars for installation. It would be wise to get several bids and talk to other owners who have worked with the providers you are considering.

RENT CONTROL How does rent control affect the additional monthly bill to the tenant? You will most likely need to give written notice before you begin billing the tenants, and you may be required to reduce rent in an amount equal to the annual average water bill for that tenant. This, of course, would not apply to most new tenants. Be sure to check with providers and your apartment association before moving forward on installation. Always check with your real estate attorney and Apartment Association regarding the proper notices.

“It’s not the will to win that matters- everyone has that. It’s the will to prepare to win that matters.” Paul “Bear” Bryant

What we at PRS PROPERTIES CAN DO. We can help you with determining the value of your building with and without submeters. We can recommend experienced licensed contractors who can perform any repairs or installations you may need. We can also look at your building for other changes that might allow you to get a higher value in order to create value without huge expenses for your building. We can help you to get the maximum value for your property, should you decide to sell, or the maximum return if you are planning to keep your building.

We always have many investors who are looking for “as-is” properties and are willing to purchase with low rents, a moratorium or even with a problem tenant in place. We have put together numerous transactions over the years which involve properties that are not listed for sale. Many investors are in 1031 exchanges and need to identify a replacement property before their 45 day identification period runs out.

Should you decide to put your property on the market, we will put together an aggressive, targeted and professional campaign to get your property sold fast. We have been doing this for over 40 years, and we will use all the tools available to bring you the most dollars at closing. If you are thinking of selling or are just curious about the value of your property, don’t hesitate to give us a call.