When investors think of updating their rental property, they typically think of interior renovations. However, there are other updates such as separating the electrical meters that will help increase your cash on cash.
Separating meters at your rental property is a costly expense and could take some time depending on permitting and inspections. But, here are three reasons you should separate the electrical meters on your rental property.
- It provides an opportunity for tenants to put the electrical utility bill in their name.
Yes, you could save money on not separating your meters and charging RUBS. However, when you handle it this way you or your property manager have to constantly monitor the electrical bill to make sure you are collecting enough RUBS to cover the bill. If not, then you’re left with the bill which affects your cash on cash.
- It provides an opportunity to upgrade your panel.
There are many properties built prior to 1990 that have the old Federal Pacific Electrical (FPE) panel. We see these all of the time. Each time we see them, we recommend to the owner to swap it out with a newer panel. The reason we recommend swapping out the FPE panel is that these panels may be at risk of catching fire. You can search online for this and you will see many articles like this that are about the fire risk of the FPE panel.
Updating the panel provides other opportunities such as adding a heating source to each unit. We recently separated panels at one of our projects and updated the panels so that we could add cadet heaters in each unit. We did this because the entire building was heated by one gas boiler. The boiler was connected to the house gas meter, which meant that the owner had to pay for the heat. After separating the meters and updating the panels, we added cadet heaters in each unit. This allowed us to take down the boiler and close the house gas account. This will save the owner a lot of money in the wintertime!
Check out this video debriefing the project.
- It could help lower insurance costs!
Some insurance carriers may charge more due to the FPE panels and if there happens to be knob and tube wiring at the property. After your electrical project is complete, you can have your insurance carrier send an inspector out to confirm the updates, which could adjust your insurance costs
Check out this video explaining how a project like this could save on insurance costs.
