Utility Billing FAQ for Duplex and Triplex Owners

Submetering is when a landlord installs individual submeters that measure each resident’s individual consumption of a utility. Utility submetering allows property owners to allocate utility costs fairly by measuring each unit’s true consumption of water, gas and electricity.

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Submetering allows landlords to fairly distribute utility costs among residents. This helps increase utility cost recovery rates by empowering residents to take charge of their usage and mentally separate rent from utilities.

Submetering is especially useful for larger properties because utilities are a highly variable cost each month. If a multifamily property has low utility cost recovery rates, it can add up to thousands to tens of thousands of dollars in added costs each month. That cost can greatly impact net operating income (NOI) and overall profitability.

Submeters are connected to the individual utility line for each unit measuring the total utility consumption for that specific unit. From those measurements, you are able to allocate costs and create more accurate utility bills for each individual unit.

While each property and each utility is different, the process generally entails making sure each unit has the ability to have a separate line for the utility, properly installing the meter and making sure you’re getting a complete and accurate read.

It’s critical that submeters are installed properly. You can go down to a local supply store to buy the hardware and install it yourself, but we recommend working with an experienced technician if you choose to install submeters on your property.

We also have a blog on submeter installation that goes into greater detail on the process and considerations to be made. Click here to learn more.

The answer to this question depends on a variety of factors. If you’re looking to fully recover the cost of utilities each month, then submetering is the best way to do that. However, you have to consider the upfront costs of installing those submeters and the ongoing work to allocate, generate and send bills to residents on time.

At the end of the day, for smaller properties, it may make more sense to add a flat utility fee to the rent for each unit. Adding a utility fee for larger properties never makes sense, but with a lower amount of units, odds are, you will get close to fully recovering your utility costs most months.

The more units you have, the more it makes sense to work with a utility billing company. Outsourcing with a utility billing company is most beneficial for both parties at scale. Because of this, there aren’t many utility billing services on the market that will take on business from individual duplexes. If you have a duplex or triplex, it may be easier and more economical to bill back utilities yourself.

There are other ways to bill utilities to get a more consistent cost recovery each month that may be useful for duplex and triplex owners.

The first is including a flat fee for utilities in the rent. This is the easiest way to begin recovering some of that cost. With larger properties the method is unreliable. With duplexes, you are usually able to recover most of your utility cost month to month without the need for installing submeters or creating bills each month.

Another way larger properties recover utility costs is a ratio utility billing system or RUBS.  RUBS, proportionally allocates costs for water, gas, electricity, trash, cable and other services to residents based on an industry-accepted formula that takes into account unit size, layout, occupancy and more.While a traditional RUBS may be overkill for duplexes, you can use the same principles to allocate utility costs by dividing your master utility bill by the square footage and occupancy count of each unit. If you want to read more about setting up a RUBS formula, you can check out this blog for more information.