31 Jul RUBS Utility Reimbursement
By Wolf Baschung, CCIM, CPM
From Los Angeles to New York, and Anchorage to Key West, RUBS utility reimbursement is taking hold. Properly allocated utility responsibility and cost is critical to apartment building operations. As utilities are supplied to a rental property, they are typically split-up, or “branch off” to connect to individual units from the main supply. Ideally, these splits could then accommodate individual meters and shutoff controls. Ideally, each user of the utility being provided would then pay their fair portion of use.
In most newer construction properties that is indeed the case. In older properties, however, master metering for the entire property is something owners must often contend with. When properties are master metered this results in higher expense ratios due to utility costs and hence lower net operating income. Sometimes it is possible to split up the electrical and gas meters, but often this proves impossible. As for water and sewer costs, separate metering is virtually unheard of and these costs are almost never charged to tenants. As we shall see, RUBS utility reimbursement systems can help with all of these.
For many years, this all-too-common predicament has left a major issue for the rental owner to sort out. The choices have been to either find a way to run new lines, meters, and equipment in the case of gas and electric metering, or take on the financial obligation of these as well as water and sewer costs in any event. In the case of commercial properties costs can be administered via lease language and CAM charges, but that is not available to multifamily properties. And even if this route is taken, a truly accurate gauge of use among multiple users and units is nearly impossible. This is how water service and responsibility allocation has been for many years – until RUBS utility reimbursement came about.
RUBS, or Ratio Utility Billing Service, is a new and simple, yet fantastically reliable method of water metering and responsibility allocation. With RUBS, the property owner no longer has to deal with guess-work or financially catastrophic, repiping projects. In addition, each party along the line will receive the correct financial obligations and usage ownership.
How does it work? RUBS is actually nothing more than a highly intuitive mathematical process. In considering factors such as household size, number of people in each unit, bathroom count, fixture count, and other important factors, the formula is able to accurately identify and allocate usage statistics for each and every individual unit of the property.
RUBS is certainly a very welcome addition to the tools of the rental trade. It is also much appreciated by many renters, offering them the assurance that they are only responsible for their portion – and not by relying on an arbitrary number named by lease, or billing by some other means. Essentially, RUBS comes in and does what meters and repiping projects do – it accurately gauges use, and does so by employing zero, actual, physical components.
An example of RUBS at work could be as follows. The best company in property management Los Angeles has to offer is struggling with water billing for a client. The client just purchased a new, 100-unit property at premium and has to reduce operational costs to make ends meet. Despite there being only one water meter for the entire complex, the management company needs to have a setup in which each unit is billed separately and appropriately for their water consumption.
In times past, either a monumental project would need to be funded, or individual, accurate metering just wasn’t going to be an option. With RUBS, a simple phone call is all it takes for the company to get started. RUBS uses the infallibility of math in place of physical equipment and remodel projects.
From small rental properties to the biggest multifamily players, RUBS is an immeasurably helpful tool of the industry. If you are in the rental business and have experienced such a dilemma in utility allocation, check into RUBS or have your property management company check into it. For many, it has been an absolute game-changer.
This company specializing in RUBS utility reimbursement has been helpful to MW Real Estate Group