Prorating Utilities On Multi Family Units
Does anyone have experience with dividing up utilitiy bills amongst tenants where separate meters do not exist? I have a non-conforming triplex that has one electric meter for all the units (it was coverted from a single family residence).
I was thinking about prorating it based on sq. ft. or number of appliances or ???
I have done the "utilities are included in the rent" before and it does not work when you have cold winters - I got killed on a cash flow basis because when the tenants were not paying, they did not have conservation on their minds. So, this is not the answer I am looking for.
Thanks in advance for any help.
Mark 
No matter how logically your proration scheme might be, your tenants will never be completely satisfied with your proration.
You will always have a tenant who says, "I was out of town for two weeks, and did not use nearly that much water or electricity.
If you can't get your utility company to retrofit the property with separate meters, your tenant relations are better off with your status quo.
At the next lease renewal, you can always point to the increased utitility costs as justification for your rent increase.
You can say that you are on "budget billing" and utilities cost $100 per month or whatever. It is common practice around here although most of the buildings have separate meters.
Electric is on square feet and water is per person.
I pay heat for my multi unit, I was thinking of providing an incentive that says this is how much I pay if you all conserve it should come to less. I will reduce the rents of the month of May by the amount under the allocated budget. If we come say 20% over the budet the next years rent will be adjusted.
How do you think that will go over?
mhvhomebyr,
Looking back to (part of) DaveTs response "..your tenants will never be completely satisfied with your proration," I think the same thing might happen if you try and have some kind of incentive to keep the useage down, everyone has to play ball. If one tenant (of all the tenants on a single meter) does not try to conserve, everyone loses. The tenants that did their part are going to feel less inclined to work with a landlord in the future.
It could work, depends on the type of tenants you have, how well they get along/communicate etc. Might be worth a little trial to get some real world data.
mark
Are you subject to rent control? If you are, it's against the law to charge for utilities unless you already have it in their lease or your tenants agree to pay(get it in writing). You can raise their rents 1% a year or so to adjust for your utility cost, but that is all (you can also raise it 3% per year as of 2004) Check out the state laws on rent control and look for any other laws in your area. California can be very tricky and the laws are generally on the side of the tenant so do your research. Dennis Block, a lawyer who specializes in tenant law, has a radio show on Wednesday night on AM radio. You can ask him any legal questions you have on the show. If you do raise the rent, make sure you do it legally.
Best of luck with all your investment property.
Another thought -- you mentioned that you have a NON-conforming triplex. Should your tenants report you to building and safety, you most likely will have to pay them $2000-$5000 per unit relocation fee and plus the $$$ to bring the property back to it's original use (SFR). Check out the zoning for your property and with your local building and safety to see if you can make it conform in anyway. Instead of being reported to the local authorities by your tenants, it might be worth sucking up the cost of utilites.
Best of luck...
Dave T you mentioned that he should consider calling the utility company and having the property retrofit with 3 separate meters. Will each of these meters then read from the same HV / AC unit or will tenant then also have to buy each unit separate HV / AC's?....
The thought that you can succeed with implementing an incentive program is nice BUT extreemly impractical. You have to have control. Now since you are in Auroa, CA I would assume that there is no rent control on your unit. But if your units are non conforming you can NOT have individual meters installed for the city inspector would not register and monter them. So you are in a quandry.
What I have done on 2 of my buildings is have an eletrican install eletrical meters that monitor the use of each unit. This is costly, but then you can really track who is using what. I had this done because my units were not legal and I needed to upgrade the eletrical (one was built in 1912). So it made sense for me.