RUBS stands for Ratio Utility Billing System. It allows to proportionally allocate utility costs to tenants in properties where there aren’t individual water meters. The more commonly implemented utility in the RUBS system is water, followed by gas, electric, trash, and occasionally cable and internet.
The RUBS system increases a property’s cash flow by reducing the utility expense incurred by a landlord, mainly when a property doesn’t have separate water meters.
The RUBS formula will consider the property’s total cost for water and divide that cost over all residences, billing a percentage of the total cost to each resident based on square footage, the number of occupants, and sometimes the number of bathrooms or bedrooms. The idea is to use the fairest option to split the bill based on the most accurate utility usage projection.
For example, if a building has 50 units, each unit has two beds and one bath. The property owner usually receives a water bill that is around $2,500. The owner may implement RUBS which is about $50 per unit. The owner usually will account for the number of people living in each unit to dial in the level of accuracy. Say there are 110 people in the whole complex. That’s $22.72 per person. The owner may choose to implement the RUBS as follows. $30 for one resident, then add $20 per additional resident. The owner may choose to get more granular and consider different floor plans and the number of bathrooms and square footage depending on the property type.