Property owners and managers can equitably divide resident utility expenditures using the RUBS billing system. We'll go through what it is, how it works, and when you should use it in this post.
What is RUBS?
The ratio utility billing system, or RUBS, is a billing technique that divides utility expenditures proportionally to renters. It's used to bill consumers for expenditures such as water, gas, electric, garbage, cable, and other services, all of which are weighted differently according to an industry-accepted formula.
A landlord or property manager can use pen and paper or Excel to handle the RUBS approach. However, working with a utility billing business that employs technologies to streamline and improve the process is a more convenient option.
How does the RUBs Billing process work?
The RUBS billing technique works by taking a property's bill for a single utility and dispersing it among inhabitants. However, you must include in elements like unit size, layout, occupancy, and occasionally bedroom count when calculating the charge.
A fair bill can sometimes be obtained by simply dividing the bill by one of these variables. However, achieving equitability necessitates significantly more frequent modifications. And there are a slew of options for doing so.
Factors Affecting Billing
Billing variables are used as modifiers to account for the impact of specific facilities in a unit on utility use. A washer, for example, may be used to multiply a unit's water expenditure by 1.3x.
Count of Tenants
Let's imagine you need to split a water bill and the occupancy technique is the best option for you. A three-person unit would pay three times as much for water as a one-person unit if water was allocated depending on the number of occupants. This assumes that three individuals share the same amount of water as one person.
This ratio isn't accurate in practice. Three persons seldom use three times the amount of water. A utility billing business, on the other hand, would fine-tune the charges using a ratio occupancy approach.
Method of Ratio Occupancy
The number of inhabitants in a unit is translated to a number of occupants for billing reasons using this procedure. Typically, this modification is made using a set of ratios and principles.
The Texas Public Utility Commission, for example, describes the ratio occupancy approach as follows in its service registration forms:
1 occupant is billed at 1.0, and 2 occupants at 1.6.
3 Occupants = 2.2 + 0.4 * # of additional occupants = 2.2 + 0.4 * # of additional occupants = 2.2 + 0.4 * # of additional occupants = 2.2 + 0.4 * # of additional occupants = 2.2 + 0.4 * # of additional occupants = 2.2 +
Texas has determined how much each new person boosts utility demand using this way. As a consequence, tenants will receive a more accurate and fair bill, making them more inclined to pay.
If you don't know or have trouble recognizing how many renters there are, you can use bedroom counts instead of ratio occupancies to make the weighted computations.
To summarize, RUBS isn't just a straightforward ratio for dividing your utility bills. It's all about fine-tuning percentages to generate a bill that tenants will pay.
When Does RUBs Come In?
When Submetering Isn't An Option
A submeter is a gadget that records exact data on tenant utility use. You must connect to a utility running into a specific unit from a common utility source in order to submeter. This isn't always achievable due to physical or practical constraints.
There's no way to identify and separate the property's water lines, for example, if they're underground. This is prevalent in flats built in the 1970s and 1980s. During this time, properties preferred to have all of the kitchens and bathrooms grouped together.
While this design allows all units to share a single utility line, it prevents each unit's waterlines from being fully captured. It is very hard to identify and submeter individual utility use due to these physical constraints.
This is only one example of how physical constraints prevent the implementation of submeters.
If the architecture of your property prohibits you from separating utilities as they enter specific apartments, you'll need to use a different billing technique. RUBS is ideal for these situations. The utility bill, rent roll, and unit characteristics are all you'll need to get started.
When You're in a Hurry
Utility submetering comes with a slew of advantages. However, installing a submetering system costs time and money up front. Landlords, on the other hand, don't always have both.
However, if a landlord's cost recovery on utility bills is inadequate, he or she still needs a solution. Otherwise, they risk losing $50-100k each month, putting a strain on their NOI and cash flow.
This puts landlords in a Catch-22 situation: the utilities are destroying the property, thus they're losing money. As a result, they are in severe need of a remedy, but they lack the time or resources to do so.
As a result, many landlords resort to RUBS since it allows them to begin collecting money right away. Especially if they delegate the task to an energy billing business.
RUBS may be set up in as little as a week, and in certain cases as little as a day. There's no upfront cost, no ordering of parts, no installation, and no maintenance on the front end since it's all done by software. The only thing a landlord needs to do is split the rent and utilities costs.
In as little as a week, an energy billing business may have you recouping your costs. You may either stick with RUBS or utilize it as a stepping stone to submetering from there.
RUBS is a low-risk and cost-effective alternative for property owners and managers to recoup utility costs. You won't have to pay anything up front, and you'll be able to start charging in a week or less. Make your life easy and deal with a utility billing firm if you want the quickest, most dependable setup.