What is RUBS in real estate?

What is RUBS?

RUBS stands for "Ratio Utility Billing System." It's a method used in multi-tenant properties, such as apartment complexes, to allocate utility costs to the tenants. Instead of each unit having its own meter to measure usage of utilities like water, gas, or electricity, the RUBS method divides the total cost of the utility for the entire property among the tenants.

This division is based on criteria such as the number of occupants in each unit, square footage, or a combination of factors. The idea is to fairly distribute utility costs when individual metering is not practical or too expensive to install, for example in older multifamily properties. It allocates utility costs to tenants based on factors like unit size or occupancy.

Benefits for landlords include reduced costs and increased Net Operating Income (NOI), while drawbacks include potential marketing challenges and tenant pushback. While RUBS can be more efficient and cost-effective for property owners, it sometimes faces criticism from tenants who prefer individual metering to pay only for their actual usage. Implementation varies by locality, with some cities restricting or disallowing RUBS.

What is a Typical Rubs Utility Cost in an Apartment Building?

The typical cost of RUBS utility in an apartment building can vary widely depending on several factors, including the location of the property, the type of utilities included, the consumption habits of the residents, and the allocation formula used. In areas where water or electricity rates are high, the RUBS utility cost can be substantial. On average, tenants might expect their portion of the utility bill to range from $25 to $100 per month, but this is a very rough estimate and can be significantly higher in certain regions or during extreme weather conditions that lead to higher consumption of heating or cooling.

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