RUBS Income in Real Estate
RUBS or Ratio Utility Billing System is a method of calculating a tenant’s utility bill based on factors such as apartment square footage, number of beds, occupancy or a combination thereof. Many properties, especially older ones, are not individually metered nor is it feasible to install individual meters for each unit. If each unit is not individually metered, the RUBS real estate methodology can be used to help landlords recover costs without directly increasing prices.
RUBS Income in Real Estate
In multifamily properties, it is not practical to install metering equipment. The costs are extremely high and often many design elements must be overcome in older properties which presents more of a hassle. When implementing RUBS real estate, expenses decrease and cashflows increase usually leading to an increased NOI. Not only does the NOI increase, but tenants are more conservative when using utilities since the cost comes out of their own pocket.
How to Implement RUBS
The objective of RUBS is to divide the utility bill equally among the property’s tenants. Accordingly, the landlord must develop some sort of ratio to allocate the utility bill according to each tenant’s usage. The ratio billing system should include factors such as the following:
The total square footage of each unit
The number of water fixtures (bathrooms, sinks, washing machines etc.)
The number of occupants
