“You can make money two ways- make more or spend less.” John Hope Bryant

It’s no surprise that tenants use more utilities when the landlord is paying. There have been some studies, but common sense tells you that when you are paying the bill every month, you are more likely to turn off lights when not home, to limit showers and the like. I don’t think it is a conscious waste of money, but when you are not paying the bill, you tend to not think about it. When you are paying the bill, if you think it seems high, you will look for ways to save.

SEPARATE METERS. Many apartment buildings and even 2-4 unit properties have master meters. They may having been changed from a single family residence. Many older buildings were originally built with master meters, Whatever the reason you may have wound up with a master metered building, you may be able to remedy the situation.

BOTTOM LINE. Ultimately, having individual meters on your rental units will add value. Not only will the change be more attractive to a potential buyer, should you decide to sell, it will decrease your expenses. This will result in improving your NET OPERATING INCOME, which will improve your capitalization rate. It may not be a huge amount, depending on your number of units and their size, but it will most likely lead to some increase in value.

NEW METERS. The cost of installing new meters can be up to several thousand dollars per unit, depending on the repairs necessary to make the change. You could do it a unit or two at a time or you could do the job during a vacancy. Be sure to check the rules about raising rents when the tenant will be taking on the new expense of one or more utilities. Rent raises in California are affected by whether the unit includes utilities.

OTHER OPTIONS. There are other options for submetering. There are companies that provide actual meters on your property, or those that can set up your tenants with a RUBS program (RATIO UTILITY BILLING SYSTEM). Under RUBS, the meters stay the same, but tenants are billed based on size of the unit and the number of occupants.

CHECK AROUND. Depending on what you are looking to spend, it is best to get all the options you can. Have a few LICENSED CONTRACTORS give you some bids. Review their work, talk to to previous clients. You might also speak with other owners that you know, to see if they have recommendations. Talk to the Apartment Owners Association. The Same goes if you are considering RUBS. Talk to several companies and a few current clients. It is an important decision, so choose carefully.

“You win some, you lose some and some get rained out, but you gotta suit up for them all.” Satchel Paige

What we at PRS PROPERTIES CAN DO. We are always available to chat. We can give you referrals for professionals, such as lenders, contractors, and engineers, so that you can decide who you feel best with. We can supply you with rent and sale comparables in the area of your properties, so that you know what rental values are in your area. It is important that you know the true value of your rental units, so that you can get them rented right away at market value, or at least as much as possible with rent control restrictions. We can look at potential purchases that you may be interested in to make the property more desirable, and maybe look at potential issues that an insurer might require you to repair.

If you should decide to sell your building, we can help you exchange into a larger or smaller properties. We can even help you move into something with less management responsibilities. We can also help with getting the paperwork together for a refinance if that is your desire. We can also recommend experienced licensed contractors who can perform any repairs or installations you may need prior to selling. We can also look at your building for other easy and inexpensive changes that might allow you to get a higher value. 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, deferred maintenance 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 currently 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.