The Scoop on RUBS
What is it and how can you make it work for you?
The topic of instituting a RUBS program (Ratio Utility Billing System) at apartment communities seems to be popping up frequently these days. Of course, everyone would like to have more control over their utility expenses and ultimately their NOI, however it’s not as simple as starting the program right off the bat and sending your residents new utility bills.
For those who might not know, the premise of a RUBS program is billing utility usage at your property back to the tenants who are using them. This of course lowers your utility costs as an owner and subsequently increases your NOI.
The first thing to consider is how the program would be installed. There are RUBS companies who will do all the work for you to sub-meter your utilities and then will take a portion of your newly generated income as their compensation. This could be a great way to go if you are looking for a quick and easy option and don’t mind sharing the revenue. A second option is to implement the program yourself. This can be done either by sub-metering or by instituting a flat utility reimbursement fee across the board to your residents.
The tricky part is analyzing if the program could successfully be implemented at your property. The biggest determining factor is what market rents in the area are versus what you are currently charging. If for example the market rent for a 2 bed with owner paid water and heat is $700 and you are charging $690 and want to bill back utilities on top that, it will be challenging unless you offer a superior product. In essence, putting a RUBS system in place is the equivalent of raising rents. If your rents are currently under market however and you are covering the cost of most utilities, RUBS might be a great option for you to recoup some of your expenses.
If you choose to sub-meter utilities yourself, of course you will also have to figure in the costs of taking on such a project. From purchasing the equipment, to installation, and maintenance, it can prove to be quite costly. Such costs could potentially take years to recoup.
Of course it’s always a good idea to check around with competing properties in the area to see if they have any utility bill back systems in place and if so, how it functions. This will give you a better idea how well your idea might be received in the marketplace.
Please submit a comment if you have experience with a RUBS program or just want to share your thoughts and as always, thanks for reading.