How to Implement RUBS in Your Multifamily Property

RUBS (Ratio Utility Billing System) can be a great way for multifamily property owners to more reliably recover utility costs every month. In this article, we explain a phased approach that can help you ensure a successful RUBS implementation.

But first: What is RUBS, and why do multifamily property owners choose to implement it?

RUBS Definition

RUBS is short for ratio utility billing system. It’s a utility billing method that proportionally allocates costs for water, gas, electric, trash, cable and other services to residents based on an industry-accepted formula: divide the total utility bill by a factor unique to the needs of the building or property.

Sometimes RUBS can be as simple as dividing the total utility bill by one of these factors. In most cases, however, more adjustments need to be made to achieve an equitable allocation of the total utility bill to residents.

Why Implement RUBS?

Behind mortgage payments and property taxes, utilities account for the largest monthly expense for multifamily property owners. On top of that, it’s a variable cost. Some months utility usage can be high. Other months it can be much lower.

Charging a flat rate or including utilities in rent is insufficient to recover those utility costs, especially in moths where usage is high. That’s why many look to a utility billing system to recover those costs.

When it comes to utility billing, property owners have two main options – submetering and RUBS.

In a submetering system, each unit in a property is individually metered so that it can accurately track utility usage for that individual unit. While submetering is the most accurate way to allocate utility costs, it’s also the most expensive, requiring property owners to invest in new hardware. In some cases, submetering a property may not even be possible, depending on the building’s utility infrastructure.

RUBS is a great alternative for property owners looking to recover utility costs.

An Overview of RUBS Implementation

All multifamily properties are different. The building’s structure and utility layout, surrounding rental market expectations, and legal stipulations all play a role in how RUBS should be implemented. Because of this, there is not one-size-fits-all RUBS implementation strategy. However, there are different planning and implementation steps property owners can follow to ensure your RUBS implementation is successful.

Phase #1: Pre-Planning & Planning

Legal Considerations

RUBS is generally a legal method for utility billing; however, its legality varies from state to state. Certain states may have restrictions around how RUBS is implemented. Before beginning anything, it’s important to check with your state and local government to ensure you’re not at risk for any legal exposure by implementing RUBS.

Local Rental Market Considerations

It you’re in an area where the surrounding rental properties include utilities in rent, billing utilities back to residents with RUBS could make your property appear less favorably to prospective residents when compared to surrounding properties.

Planning

Once you’ve determined that it’s okay to move forward with RUBS, you can plan your RUBS method.

To do this, you’ll need to evaluate the needs of your property and decide on an allocation method or billing factor that makes the most sense to get a division of the bill that is most equitable and best approximates usage per unit. Some billing factors to consider include unit size, layout, unit occupancy and even bedroom count depending on the needs of the property.

Phase #2: Communicating with Residents

Rolling out RUBS in your multifamily property will be a change for your residents. A solid communications strategy developed before implementation will ensure that residents’ questions are answered and compliance with the new billing system is high.

You need to make sure you communicate all the important information your residents will need to know about the switch to RUBS billing, including:

• An outline of the billing process moving forward.
• Important dates like when they can expect their first utility bills and when payment will be due.
• Accepted payment methods and clear information about an online payment portal if you are using one.
• Information on who to contact with any feedback of billing disputes.

You should also include an explanation for the shift to RUBS. Your residents will have questions and concerns about the new system, so it’s important to be ready to address those questions and concerns with as much transparency as possible. Once you’ve developed your communications strategy, it’s important to notify your residents about the change at least six months in advance.

Phase #3: Implementation

There is no physical equipment in RUBS, so you’re not “switching RUBS on” like you would for a submetering system. However, there are a few things you will need to have in place to ensure your RUBS implementation is smooth starting on day one.

Your communications strategy should have given a notice about when the RUBS program will start. From that day on, you need to make sure you have all relevant building and unit information, so billing is accurate. Also, you will need to make sure your utility billing is set up either in your property management software or that you have a solution to do it manually.

Either way, residents should know where and when to expect their RUBS bills each month.

Also, any new lease created and signed after your start date should include information about how RUBS will be used to charge them each month to prevent any disputes down the road.

Phase #4: Monitoring and Optimization

After you implement RUBS, monitor the progress of the new utility billing system, especially in the first few months.

Be responsive to tenant feedback and any disputes that may pop up and make changes to your RUBS formula to more accurately reflect potential usage of different unit types. If you make any changes to your allocations, be sure to adequately communicate the change.

Conclusion: Working with a Utility Billing Expert Can Ensure Success

Properly implementing RUBS in your multifamily property can be a challenge, especially if you are new to utility billing. It takes specialized knowledge to wade through regulations and resident communications. On top of that, generating bills, processing payment and tracking down overdue payments each month will add more to your and your team’s plate.

That’s why many elect to work with a utility billing provider when first implementing RUBS. The right utility billing provider can help you plan out your RUBS, creating the most optimal setup to match the needs of your property. And once billing starts, they can handle the monthly work of generating bills, collecting payments and answering resident questions. You get all the benefits of reliably recovery utility costs without the extra time commitment.

Ready to get started with RUBS in your property? Contact the utility billing expert at Synergy. Our team is here to ensure your RUBS implementation is a success.