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TMR BLOG: What is “Ratio Utility Billing System (RUBS)” in real estate investing?

For real estate property owners, the “Ratio Utility Billing System (RUBS)” is a beneficial system that can decrease operating expenses and lead to higher revenue, as well as property value.

What is “Ratio Utility Billing System (RUBS)?

The ratio utility billing system refers to the calculation of utility consumption of tenants. It is based on multiple factors, including occupancy, number of bedrooms, and unit square footage.  The formula is used to allocate electric, water, sewer, gas, pest control, and internet bills, based on the factors listed above.

Residents are billed for their determined utility consumption on a monthly basis. Using the RUBS method throughout a property offers multiple advantages, including fast implementation, immediate cash flow increases, and returns on expenses. As tenants can be typically resistant to increased rent rates, using the RUBS method is a good way to achieve an increase in revenue.

Advantages of the RUBS formula

While one of the key benefits of RUBS lies in the fact that it encourages the conservation of utilities, property owners get to enjoy higher returns on their investment as the utility costs are borne by tenants. Conserving utilities is also beneficial to the tenants as their monthly utility bill is reduced. By passing over utility expenses to tenants, property owners can discourage wasteful utility usage while protecting themselves against fluctuating utility prices. The RUBs formula ensures property owners get a consistent revenue stream.

Other Benefits Include:

  • Fair distribution of costs -The sophisticated system of RUBS can also take into account factors, including children’s ages to calculate utility usage. This ensures tenants are comfortable with the distribution of charges.
  • Better management of costs – Property owners can manage costs in a better way and utilize the savings to reinvest in their property or carry out much-needed repairs. 
  • Protection for rent capping – With caps on rent increases, RUBS offers significant protection to property owners as tenants bear the cost of utilities.
  • Reduction in utilities consumption – A recent study shows that the use of RUBS formula led to a reduction to the tune of 6 to 27 percent in the usage of water. The Environmental Protection Agency also states that the Ratio Utility Billing System promotes utility conservation.

●      Speed of implementation – The implementation of the RUBS formula is seamless, quick, and convenient.

  • Cost-effective option – Investing in submeters can often cause a huge dent in the financial health for property owners, RUBS is a cost-effective alternative.

Hi, my name is Michael Avent. I founded The Multifamily Review in 2020. I’m a Commercial Agent at Northcap Multifamily located in Las Vegas, Nevada. My vision for The Multifamily Review is to be the most trusted resource for all Multifamily Investors and Industry Professionals. We strive to offer the best and most up to date content to our readers and are always open for suggestions. Make sure you sign up to join our newsletter to stay up to date on our latest blog, ebook, and more exclusive content that’s coming your way! The Multifamily Review team and I look forward to building a deeper relationship with you!

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