We get this question a lot, especially if our clients are coming to us with a previously all-bills-paid model.
The truth is that no one method will work for every multifamily property, but that’s why we’re here to help explain how it all works.
Your Method Depends on a Few Different Criteria
When you’re looking at a billing back water to your tenants, there is a lot to consider. The state of your community may be a significant factor in how you bill residents.
Other facets to think about include current data, historical data, the size of the units, the types of units on your property, as well as the mix of units.
Quite simply, it can be a headache to get it right if you’re not sure what you’re looking at.
State of The Community
When we talk about the state of the community, we’re not talking about the physical location. We’re talking about the condition of the community that you’re managing.
If it is a well-run community with lots of documentation and available data, then you’re going to be better off going with an occupancy-based billing technique. We always recommend to bill based on a combination of both occupancy AND square footage.
On the other hand, if it’s a new-to-you property that was a mess when it came under your management or ownership, you may be better off utilizing a state regulated bedroom average in combination with the square footage of your units as part of a 50/50 allocation.
Staying in Compliance
When implementing a RUBS program, once you select how you’re going to allocate out utilities, you need to make sure your residents sign off and acknowledge how they will be billed for their utility usage in their lease.
If you’re managing a rental property in the state of Texas, you need to make sure that you have your tenants signing off everything they will be assuming financial responsibility for. This includes addendums for the following utilities should you choose to RUB them through to the resident: Electricity, Water, Stormwater, Sewer, Gas, etc.
When having these utility addendums signed off on by your residents, you’ll also need to make sure that the allocation method/bill back equation that you determined in Step 1 is listed out. Generally your options are as follows:
1. Square Footage
2. Occupancy
3. Combination of Square Footage and Occupancy
4. Submetered Billing based on Actual Usage
Implementing RUBS Water Allocation Billing
If you’ve previously had an all-bills-paid model, then making the transition to a RUBS can make things a little tricky. You’ll need to make sure you give your residents at least 30 days notice that you’re making the billing transition and be sure you’re deciding on an allocated billing method that sets your utility recovery up for success at your community.
Companies like Southwest Utility Solutions can make life easier on you by taking care of the hard work.
We know what needs to be done, what questions to ask, and how to get things started on your multifamily property – we’re all about your best interest!
If you need help or have more questions, please give us a call at 281.580.3444 or drop us a line at sus@swutilitysolutions.com.