We are in contract with a 25 lot park in southern CA. Seller charges a $50 flat fee for water, but park is submetered. Each tenant uses about $100 worth of water. How can we calculate the correct expense ratio if the tenants paid the correct rate of water expenses they incur?
I don’t understand the question. If they pay a water bill based on submetered values then it is materially a zero pass through on the books, minus water used by the park for other purposes.
You have to net out the water from the deal.
Remove the $50.00 per space income and reduce the water expense by 90% (the park will use some water for landscaping, pool, laundry room etc).
Water should be a pass through charge. Once you get the meters read and billed property the water expense of the park will be minimal.
If you need help PM me we can work it out.
AW
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You have a $2,500 monthly bill for just water? That seems high.
Yes, you would just bill the tenant for water based off of usage and charge the same rates as the local water company. What is left is the amount the park uses for landscape, laundry etc.
Make sure the meters are calibrated and current with county weights and measures.
Agree. I bet they have a ton of leaks and since they are not being charged for metered use they just let it run!!! You could also have a broken pipe in the park somewhere.
The meters must be calibrated every 10 years. There should be a little stamp on the bottom with a date code. It’s normally pressed into the locking wire at the base of the Meter.
You should also verify what the meters are reading. Ie Gallons vs Cubic Feet. Cross reference that with your master meter bill.
If you need to hire a good billing company. I have had success with Parkbilling.com
AW
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If you are submetered, you would not use a ratio. You read the actual usage and multiply it by the rate on your invoice. For example, if a tenant used 3,000 gallons and the price is $18 per 1,000, you would charge $54.00.
If you do not have meters, you use a Ratio Utility Billing System (RUBS). In that case you form some type of ratio that is allowed by law. For example, you could form a ratio based on # of bedrooms, # of bathrooms, number of fixtures, number of tenants, etc. For example if you have 100 tenants in your park and one unit has 3 occupants, that unit would be charged 3/100 of the water bill that you receive. If your bill is $2500 you would then charge $75 to that unit.
We had a tenant once who was using $1200 in water/sewer per month. He let his faucets leak 24 hours per day because he didn’t care. We did not realize this until we installed meters.