Trying to figure out if it is worth my time and energy to submeter water at a small park. 28 sites, total water bills of about $2,000 per quarter (5% of revenue). Sewer is flat fee per connection. We only have well water parks otherwise so would be the first time submetering.
Is an $8,000/yr savings in NOI worth the added administrative work/headache? Or is it really as easy as the sales reps suggest
Short answer is yes-. To dig deeper for your self, How much is your time worth?Do you have park helpers to assist with this? What is the cap rate of the park? That will give you your $value from your 8k savings? Also depends on which meters- manual/automatic readings. Do you have platform that can incorporate the readings and change them into $ amounts per tenant?
All good points thank you! Yes we’d be using automated Metron or equivalent equipment integrated into Buildium for billing. In theory it’d be streamlined. Value at an 8-10 cap is an obvious payback.
Why don’t you meter your Well water parks? I have two Well water parks, both metered. Pumping, testing, and managing your water system is not free. I treat the septic and well water sides of the business as separate businesses in the sense that they must also be profitable.
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@SDGuy honestly, I had never considered it! So on a basic level I assume you take operational costs (testing, repairs, admin etc) and projected capex and just annualize it / spread it over average consumption to come up with the rate?
There are numerous ways to come up with the rate.
The best but LEAST cost-effective way is to hire an engineering firm that specializes in doing a rate study. This can cost from $5k-10k.
The least expensive way is to call the nearest water district and ask them what they charge.
Another way is to figure out all your costs and run the calculations yourself. The issue with this method is that you do not have good usage data. For example, what is the park using versus what are the tenants using?
My best suggestion is to call the nearest water company and copy their rates. Then, after you get a full year of data (usage expenses, etc), you can adjust your rate accordingly.
I prefer to have a fixed rate portion and a usage portion.
Here is one of my parks bills. This park has a flat fee plus usage.
This is a different park. In this park, we bill a flat fee, but the tenants get X amount of water included, and then we bill for high usage.
Over the free amount:
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