Hello Everyone,
Has anyone ever bought a multi-family building where all the apartments had their gas and electricity under one meter that the landlord paid for, but then went through the process of putting an individual meter on each apartment? I just want to know in general, is this a big ordeal? I know that every building is unique and situations would be different, but in general is this a huge expense? In general, is this expense worth it? I figure if you left it alone, you can adjust rental price to account for utilities paid, plus all utilities paid would be deductable anyway. I figure this would probably be ok if the tenants were conservationists, but thats probably wishful thinking. I know that if I didn’t have to pay for gas or electricity, I would leave every light and tv/radio on at all times and keep my house at a tropical 78 degree all winter long.
Any thoughts/feedback from anyone who has owned a building and paid for all utilities and/or who has gone through the conversion process of individually metering apartments would be greatly appreciated.
Thanks!
In my opinion I would seperate all utilities. I can do most of the changes myself and what I cant do I have a few friends who can so its not costly to myself but it wont be cheap adding new heating systems . I would say this if you have the money to seperate the heating systems then do it if you rather not spend money to do it then make it as favorable for yourself as you can. As the electrical goes I would suggest getting that done its not very expensive and you wont have to deal with the headaches of tenants who will abuse it. Of course thats if all the breakers are done so you dont have rooms in 2 different units with the same breaker if that happens more cost is involved to seperate them. I would put in a thermostat that if tenant tries to change it then it shuts down the system and you have to enter a code to start it back up so you can keep it set to 67 degrees or whatever you think is reasonable. They can buy their own electric heaters if they need to be warmer. I had deadbeat tenants and I had all utilities seperated but imagine this in the winter you are paying for their heat and electric and say they dont pay there rent. How mad will you be at on top of losing your rent money your paying there heat and electric so it wont effect them at all. Utilities are deductable but in my opinion but I dont want the hassle.
Well I will have to totaly disagree with the thought of controlling your tenants thermostat. It is just plain wierd to do so, but also is a liability for you. You wouldn’t want someone to get hurt in summer or winter because they took other measures to keep warm or cool more than you wanted them to OR if that control system keeps the unit off and locks it out then the tenant would have NO heating or cooling till someone came out to reset it. Kinda odd to do that, but I am not landlord.
I do have some experience with buildings and wiring and I do not think it would be costly to SUB-meter the power. That would be where you would have to take care of billing each tenant for their usage. This is accomplished rather easily with some power meters. Good if the number of units is manageable not like 50+.
Changing the meters to where each unit has their own meter from the power co. might be alot more expensive. Best place to ask other than someone who has done it is to call the power co. themselves or a COMMERCIAL electrical contractor.
Good Luck.
You might disagree with how I do things but you dont have to say its weird and odd. I know alot of investors who use the same thing. I know 2 property management companies who use it also. Doesnt effect anything in the summer with my rentals because I dont have air conditioning only heat. How is the heat thermostat odd if they dont touch it no problems… I have it also in a locked case so people cant mess with it but they can get into if they try hard enough. If the system would fail has nothing to do with the thermostat and I would have to come out anyways right? So only if they break the lock box and turn it up it will shut off… by the way explain to me how its a liability? If I do something I shouldnt my lawyer would let me know it. If your gonna spend the money to seperate the electric dont sub meter it because its no different then you paying for it if the tenants refuse to pay it. Your stuck with the bill. Either get meter boxes put on or leave it the way it is in my opinion. Putting the new panels in and seperating the electric is the hardest part. Adding new boxes outside is easy since they are side by side still costs money but I think worth doing.
Sorry didn’t mean for you to take it personally. I meant that it is wierd or odd to be a tenant in an apartment, but not have access or the ability to adjust your own thermostat. I have never seen or heard of that till now. I am also in Texas so we do worry about both the heat and A/C though not responsible if there is no A/C equipment provided.
I would put in a thermostat that if tenant tries to change it then it shuts down the system and you have to enter a code to start it back up so you can keep it set to 67 degrees or whatever you think is reasonable.
This is what I thought might be a liability if the system shuts off and is locked out and does not produce heat in winter months. This fault would not be a system failure, but a lockout that requires a manual reset due to the stat being setup as such.
Seperate meters…
Hmm. Let me say this about that…
From an appraisal standpoint, I would want to seperate the electric meters. Which is what I plan to do with my (hopefully) soon to be 24 unit apartment building which I plan to flip in two years. In addition, it has electric heat.
Think about it…
It cost me about 25K to install 25 meters and breaker boxes for each unit (24) +mgrs qtrs, laundry, and lights,
Fortunatly it’s all Romex
I will save@ $20,000.00 in renter’s electric bills annually by installing individual meters.
My CAP rate is .10,CAP rate = 20K
I just added $200,000.00 to a new appraisal in the second year.
<I will save@ $20,000.00 in renter’s electric bills annually by installing individual meters.
My CAP rate is .10,CAP rate = 20K
I just added $200,000.00 to a new appraisal in the second year.>
That statement is predicated on the idea that the apartment rent is based on a heated and/or air conditioned price…or at least, the cost of electricity is currently the owner’s responsibility and the rent is adjusted to account for that.
If you place the onus of utilities on the tenant with individual meters, are you saying that you would keep the rent the same AND now make the tenants pay the electric bill, too? Are teh rents that far below market that this can be supported?
If not, then your numbers don’t reflect accurately…
Just my 2 cents.
Keith