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What Is RUBS Utility Billing? A Guide for Multifamily Properties

Apartments

What Is RUBS Utility Billing? A Guide for Multifamily Properties

June 04, 2020

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For many multifamily and commercial properties, residents and tenants are billed monthly for their electricity bill, as well as the overall rent bill. For a majority of multifamily renters in the US, the monthly rent bill includes the cost of water and sewage, which then puts the responsibility of paying those utilities on the property owner.

For multifamily property owners, this cuts into the net operating income (NOI) and multifamily cap rates, making properties less profitable and investments less valuable. And as water prices increase as certain areas experience drought, property owners are looking at solutions to counterbalance this problem. 

While the most accurate solution is submetering, allowing properties to individually track water consumption among the residents of multi-unit communities – this is not an achievable goal for many multifamily properties due to costs and outdated infrastructure.

One alternative solution that has gained traction among many properties? RUBS billing systems.

What Is Ratio Utility Billing System (RUBS)?

Ratio utility billing system (or RUBS) is a cost-effective alternative for buildings unequipped to use submeters. RUBS considers the total cost of multifamily or commercial property’s utilities including water, sewer, waste, trash, electric, and gas, and calculates individual resident’s utility bills based upon a pre-determined formula.

RUBS vs Submeters

Submeters allow buildings to charge individual tenants for the exact amount of utilities they used in a given period. Submeters rely upon specific plumbing and electrical configurations that can be planned into the construction of new buildings. In practice, submeters are the most accurate form of utility billing for multi-unit properties as it measures the exact usage amount among residents.

However, for existing buildings, reconfiguring utility flows is extremely expensive, and in some cases impossible due to the construction of the building. The initial capital investment to implement submeters can cost properties upwards of $400 per unit, without including installation costs.

RUBS provides buildings with a fair and equal way of redistributing the cost of the building’s utilities in the most balanced way possible – helping properties cap rate and net operating income.

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How Is RUBS Calculated?

When calculating resident utility costs using RUBS, the following factors influence the end cost for individual tenants:

  • Occupants Per Unit
  • Square Footage Per Unit
  • Number of Bedrooms and Bathrooms
  • Number of Water Fixtures
  • X-Factors (ie. Dishwasher, Washer & Dryer, etc.)

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4 Benefits of RUBS for Multifamily Properties & Residents

RUBS allows buildings to provide a transparent way of dividing up utility bills in communities. Here are a few of the most obvious benefits of RUBS utility billing systems:

  • Cost-Efficient Alternative to Submeters – RUBS provides an alternative solution to submeters that won’t break the bank.
  • Environmental-Friendly – RUBS separates utility costs from overall rent. Studies have shown that there is a link between water conservation and breaking out utility billing from overall rent costs – with properties using RUBS using up to 27% less water usage. 
  • Reduces Operating Costs for Multifamily Buildings – It allows for buildings to not under or overcharge residents based upon predictions for utility costs, saving multifamily and commercial properties operating expenses.
  • More Resident Control – RUBS gives residents a direct way to reduce their cost of living by being conservative in utility usage.

6 RUBS Utility Billing Providers for Multifamily Properties

Many utility companies offer RUBS to multifamily properties to help recover costs and increase net operating income. Here are a few examples of multifamily RUBS providers in the US:

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Next Steps for Multifamily Property Owners

RUBS utility billing is a great alternative for multifamily property owners looking at a way to increase NOI. Multi-unit building owners should continue to follow proptech and multifamily trends closely for additional new services and products that help to increase the value of their real estate investments.

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