Top 10 Reasons to Implement a Ratio Utility Billing System (RUBS)

As a property owner, maximizing your returns has as much to do with increasing your revenue, as it has to do with optimizing costs. A number of investment properties, however, continue to make less profit than what they should ideally be making.

This is the exact reason why we at Beach Front Property Management, recommend that our clients use a Ratio Utility Billing System which allows you to increase your overall net operating income.

What is Ratio Utility Billing System? 

Before one looks at the advantages of a ratio utility billing system, let’s summarize what the system actually entails. Simply put, RUBS is a method by which the utility consumption of each tenant can be calculated in multifamily communities. The calculation factors in many aspects such as:

• Size of the apartment
• Number of occupants, and more

The formula can effectively be used to apportion water, electric, gas, sewer, internet or pest control bills based on the number of tenants in a unit.

RUBS is guaranteed to be quick to implement and provide an increase in cash flow. 

Why you want to Follow the Ratio Utility Billing System

Below are the top 10 reasons why you should look at implementing RUBS:

1. The Utility Billing is Absorbed by Tenants

One primary advantage of a Ratio Utility Billing System is that it requires tenants to pay for the utilities that they use. This ensures that property owners do not have to pay for utilities. 

2. Fair and Equitable Way of Distributing Costs

RUBS remains one of the fairest means of redistributing the costs of utilities. A sophisticated system can even take into account aspects such as children’s ages when calculating utility usage. This helps tenants feel comfortable knowing that they are being charged fairly. 

3. Helps Owners Better Manage Costs

Because property owners are saving on utility costs, you can use the savings to either reinvest in the property or fund much-needed repairs. Also, landlords do to have worry about the impacts of tenants overusing utilities, especially given the upward trajectory of utility rates.

4. Shift from Net Operating Expense to Net Operating Income

A ratio utility billing system converts what was a net operating expense to net operating income. Utilities are no longer an expense paid by the property owner, and thus, they can bring in more income to the property. This, in turn, has an impact on the bottom line as also on the valuation of the property.

5. Protection Against Rent Capping

In the face of Assembly Bill 1482, which caps rent increases across California, RUBS emerges as a protection to landlords. While the rent cannot increase, RUBS allows the utility rate increases to be borne by the tenants. In the absence of a ratio utility billing system, the landlord would have to absorb the costs of rising utility rates without the ability to raise rent to compensate for the expense. 

6. Ensures that the Tenants are Mindful of Utility Usage

RUBS helps support the CA Energy Commission’s Energy Efficiency Program by making tenants more mindful of their utility usage. This incentivizes tenants to conserve their utilities to prevent paying a large utility bill. It has been shown that the adoption of RUBS encourages tenants to report issues such as leaky faucets promptly, as this could cause their utility bills to go up. One of the biggest advantages of RUBS is the encouragement that it offers to the community to conserve utilities as a whole.

7. Greater Resident Control 

RUBS helps residents exercise control over their cost of living because they only pay for the utilities they use. 

8. Significant Reduction in Usage

A recent study by the National Multi-Housing Council and National Apartment Association revealed that properties that use a RUBS formula see between 6 to 27% reduction in water usage. Both the Environmental Protection Agency (EPA) and National Apartment Association (NAA) have also concluded that a Ratio Utility Billing System encourages utility conservation.

9. Cost-Efficient Alternative to Submeters 

RUBS is a cost-effective alternative to submeters, which also enables buildings to charge individual tenants. However, the initial capital investment in implementing submeters can mean breaking the bank. RUBS, in comparison, has a low initial investment. 

10. Quick Implementation

Implementing a ratio utility billing system is a quick and seamless process. 

Why Choose RUBS Over All Bills Paid

A Ratio Utility Billing System is one of the most cost-effective methods of transitioning utility costs to residents and ensuring that as a property owner you aren’t responsible for an expense that you have nearly no control over. By separating utility costs and billing tenants directly, owners can also not only shield themselves from rising utility prices but also increase the value of their property, while at the same time benefiting tenants.

Beach Front Property Management helps property owners maximize returns not just by increasing revenue, but by controlling costs. A key strategy recommended is the Ratio Utility Billing System (RUBS), a cost-effective method to allocate utility expenses fairly among tenants based on factors like unit size and number of occupants.