Multifamily Water Submetering Guide

Rising water costs in multifamily housing pose a significant problem to property owners and residents. Over the past decade, average US water costs have increased year on year; this increase is driven by climate pressures, infrastructure strain, inflation. In traditional multifamily setups, tenants are often billed through shared allocation methods, such as RUBS (Ratio Utility Billing Systems), which base costs on collective consumption rather than individual consumption, leading to unfair billing and a lack of personal accountability. This creates significant inefficiencies in multifamily home water management, where landlords lack visibility into individual-unit consumption, while tenants are disincentivized from changing their own habits.

An effective response to this issue is multifamily water submetering, in which individual water meters for apartment units measure unit-level consumption. This enables property managers to track consumption more effectively and makes tenants and residents accountable for their own costs. From studies and practical experience, data show that submetering can reduce water use by 15-30% or even more, representing a significant reduction in ongoing water costs.

While some owners have concerns about rollout costs, water submetering doesn’t have to break the bank. But while cost is an important factor, there are many other considerations when implementing a water submetering solution. This article will discuss cost, types of submetering, how submetering works in practice, and other challenges associated with new deployments.

What is Multifamily Water Submetering?

Multifamily submetering is a system in which each unit in a multifamily property is equipped with its own water meter that tracks water flow independently of the building’s master meter. This means tenants are billed for their actual water consumption rather than estimates or formula-based allocations. This is fundamentally different from traditional master metering, where a single meter measures consumption for the entire building, and costs are split or allocated by a formula.

Multifamily water submetering enables multifamily home water management services connected with a utility to track consumption at a much more granular level, providing fair billing and transparent cost allocation for tenants while also supporting compliance with local or regional regulations.

How Does Multifamily Water Submetering Work?

Modern multifamily water submetering is a simple and easy-to-understand process. It works much like traditional master metering, but at a much more granular scale. The main difference is that each unit is metered separately, allowing it to be billed individually. There are three important differences in submetering versus traditional metering: meters, data collection, and billing processes. 

Individual Meters per Unit

In a typical multifamily metering setup, each unit is supplied with its own water sub-meter. This means individual water meters for apartments, units, or condos are installed at each unit’s water entry point. Modern systems use a range of meters, from more traditional mechanical water meters to innovative ultrasonic smart meters, to measure water flow. Many smart water meters offer advanced features such as automatic leak detection and mobile app for monitoring and alerts. 

Data Collection

Traditional submetering systems require manual meter readings. This means physical meter inspections, which can be labor-intensive and error-prone. However, many modern water submetering solutions are IoT-enabled smart systems with significant automation. These enable fully automated, remote meter readings, reducing the need for physical inspections and improving data collection efficiency and reliability.

Billing Processes & Analytics

In submetering solutions, data is usually aggregated into utility management platforms designed to collect it and support data for billing. These usually include tenant usage dashboards, detailed data for landlords and managers, and can be integrated with billing platforms other property management software.

Modern submetering systems provide substantial additional capabilities compared with older systems, including real-time monitoring, leak detection and automated alerts, device and network monitoring, full property visibility on usage analytics.

Benefits of Multifamily Water Submetering

Water submetering offers significant benefits for both landlords and tenants, whether these are financial, operational, or satisfaction-related. Key advantages include utility cost recovery, improved billing fairness and transparency, leak detection, reduced water consumption, and increased property value and marketability.

Utility Cost Recovery

Under traditional master metering systems, many landlords charge tenants a fixed price or rate for water that often bears no relationship to actual water consumption. This can leave property owners facing substantially higher costs. Water submetering allows property owners to reduce their utility expenses by passing the costs directly to the tenants who generate them.

Reduced Water Consumption and Waste

Water submetering can significantly reduce total water waste and consumption, primarily by incentivizing behavioral changes. Tenants’ bills are directly tied to their own water consumption, so they are more likely to conserve water. Various studies show that water submetering can reduce total water consumption by up to 30% or even more.  In one California community, Mainlink’s submetering solution unlocked $17,000 in monthly savings.

Improved Billing Fairness, Accuracy, and Transparency

Disputes over water bills are a common cause of landlord-tenant friction in multifamily properties. Modern submeters provide extremely accurate measurements, allowing landlords and tenants to be confident that consumption data is accurate. When tenants understand that they pay only for what they use, and their consumption data is transparent and easily accessible, fewer disputes arise, and those that do can be resolved much more easily. 

Leak Detection and Property Damage Prevention

Smart water submetering systems can detect continuous flow anomalies such as toilet leaks much earlier than manual detection. Such early detection can reduce water damage costs by thousands per incident, allowing landlords to optimize maintenance budgets and direct resources where they are needed most.

Increased Property Value and Marketability

Properties with modern multifamily water management solutions and other energy-saving and sustainability measures are much more attractive to investors, as these systems deliver a significant improvement in NOI. Some tenants prioritize properties with existing water or energy-saving measures, while others will be more attracted to properties that allow them better control over their own utility expenses.

Data-Driven Insights

Detailed consumption data and statistics provided by modern water submetering systems allow landlords to better optimize their operational budgets.. Comprehensive analytics and data can help owners plan maintenance, budget for infrastructure upgrades, and target resources where they can be used most effectively. Most importantly they have access for full visibility of their properties. 

How to Choose a Multifamily Water Management Solution

Selecting the right management solution for your unique context is essential, as submetering systems are not interchangeable. The system chosen directly impacts ROI, tenant satisfaction, and operational efficiency. As such, there are several essential factors to consider before making any choice. By assessing your needs in each of these areas, you can better evaluate vendors, systems, and technologies.

Hardware and Meter Compatibility

One of the most fundamental considerations is compatibility. Any hardware selected should be compatible with the existing plumbing and building layout. Some solutions may be totally incompatible, while others could entail substantial additional costs. Pipe size and material can affect the suitability of a given meter type; if your portfolio includes mixed building types with different pipe sizes, ensure your vendor can supply meters that fit.

Connectivity and Network Technology

The choice of communications module can impact overall costs and suitability. Cellular-based protocols such as NB-IoT incur ongoing subscription costs and are unsuitable for deployments in areas with poor cellular reception. In contrast, LoRaWAN is a highly flexible and adaptable protocol enabling total ownership of the network. It offers a highly scalable framework, predictable operating costs, reliable connection and strong suitability for low-bandwidth IoT applications such as submetering. Each protocol has its own advantages and disadvantages that can impact a given rollout. Network selection should always be discussed with and advised by professionals, because the best choice depends on the unique needs of a specific project and property.

Data Platform and Analytics Capabilities

Robust data platforms with dashboards, alerts, and predictive analytics provide landlords with the detailed insights needed to make data-driven decisions. Integrations with tenant-facing apps improve transparency, empower tenants to take accountability for their own consumption, and can aid regulatory compliance in some regions. Check with your vendor what options their solution includes.

Billing and Integration Options

A good system can be integrated with billing or other 3rd party systems to make operations seamless.

Scalability and Long-Term Support

When implementing a solution across a large property or portfolio, it’s important to consider how it can scale with other IoT devices – and whether the provider offers long-term support. A properly planned solution will be more cost-effective and efficient than one that isn’t. Ask questions about software upgrades, the potential for hardware upgrades, and support for expansion.

Vendor Expertise and End-to-End Services

Vendor expertise is a key factor in decision-making. By partnering with a reputable, experienced provider, you can avoid many common pitfalls of deployment and installation. Some providers may only offer meter hardware, without an accompanying solution, so if you’re looking for a management solution, prioritize providers offering meter hardware, communications technology, data management platforms, and additional features like apps for residents.

Type of Solution (Manual, AMR, AMI)

Manual meters typically offer the lowest upfront cost, but require labor-intensive monthly physical meter readings, frequent meter changes or maintenance. AMR and AMI meters could be more expensive upfront, but can collect data remotely while offering additional functionality.

Types of Multifamily Water Submetering Systems

The water submetering industry has seen rapid growth and diversification over recent years, offering landlords and property managers multiple options. There are three types of water submetering systems in use: manual systems, which are traditional meters; automated meter reading systems, which don’t have advanced features; and advanced metering infrastructure, otherwise known as “smart” submetering systems with advanced monitoring opportunities.

Manual Submetering

Manual submetering is the most basic and traditional type of submetering. It requires physical meter readings, but offers the lowest upfront costs. However, manual submeters are prone to clog and their accuracy degrades over time. These meters require constant maintenance or replacements. Meter readings are typically performed by a technician or property manager, which can also increase overall metering costs.

AMR (Automated Meter Reading)

AMR systems offer wireless data collection, but without advanced features such as leak detection. They’re moderately expensive compared with manual submetering systems, but are more efficient, and are a much more modern approach to metering than traditional systems. They offer reduced labor because of the remote readings, improved accuracy, and easier data collection when compared with traditional systems, making them an attractive option. It is important to understand that AMR system usually have a mechanical meter and transmitter installed next to it to collect data. This means – more hardware costs, more on installation and maintenance. 

AMI / Smart Submetering Systems

Fully smart AMI systems offer almost-real-time monitoring and data collection alongside advanced capabilities such as leak, freeze, burst, backflow detection. These systems could have higher upfront costs, but also the best long-term ROI. Because they offer comprehensive features for utility management, AMI systems are increasingly popular with building owners and managers.

AMI systems offer:

• Real-time data
• Alerts
• Enhanced analytics
• Two-way communications
• Integrations with other smart infrastructure
• Simplified maintenance

How to Implement Water Submetering in a Multifamily Property

Implementing submetering is a multi-step process that requires technical evaluation, technology selection, and operational planning. A well-planned implementation can ensure accurate billing, long-term reliability, and a strong ROI.

Step 1: Assess Property Infrastructure

The existing plumbing layout needs to be assessed to evaluate the feasibility of any retrofits. Some plumbing systems may be incompatible with some meter hardware due to complexity or accessibility issues. Understanding your system layout is crucial.

Step 2: Choose the Right Partner 

The right partner will help you to select meters, choose a network technology and type, and advice on software. Some network technologies will be unsuitable for certain rollouts. Choosing the right technology package is often more cost-effective and practical than picking each technology individually. At this point, it’s essential to prioritize scalable, future-proof solutions that can grow with the needs of your portfolio from the partner who can deliver it all.

Step 3: Installation and System Setup

Installation and system setup are best done by a qualified, certified professional. Many plumbing systems are complex, especially in retrofit projects, as they were typically not designed with submetering in mind. Submeters should be fitted at the unit’s water entry point. AMR and AMI solutions will require additional system configuration, testing, and validation. A key aspect of any installation is to minimize the disruption caused to tenants.

Step 4: Billing Setup and Tenant Communication

Before switching to any new system, tenants should be clearly informed of any changes. This helps with tenant satisfaction but may also be a regulatory requirement. Always ensure that your new submetering system is both compatible and integrated with your existing billing systems and platforms, if any. 

Step 5: Monitoring, Maintenance, and Optimization

After a successful installation, it’s important to continue monitoring the system. This is essential for detecting leaks and tracking performance. Data-driven insights can help landlords optimize water usage, target maintenance budgets more effectively, and maintain system efficiency over time.

Costs of Multifamily Water Submetering

A common concern from building owners and landlords is the overall cost of water submetering. Deployments can vary considerably in cost depending on unique operational requirements, specific practical conditions, and the chosen system. As such, every deployment is unique and incurs its own set of associated costs.

As an illustrative example, in a 200-unit multifamily building in California, Mainlink’s smart water submetering solution is estimated to cost roughly $30,000, compared with more than $50,000 for a traditional submetering setup in the same scenario. You can use this simple calculator for property managers to calculate potential costs of the smart metering system. 

Across the U.S., meter hardware and installation costs vary by project, so property owners should request detailed cost calculations from their submetering partner.

ROI vs Upfront Investment Costs

Although upfront investment costs for water submetering can feel prohibitive, typical rollouts receive a good ROI, and according to research by the US Department of Housing and Urban Development, consumption declines enough under submetering to recover the cost of the submetering system over relatively small timeframes. Additionally, by shifting water utility costs to a tenant-billed variable cost, owners can realize significant reductions in operating budgets. Long-term, the ROI is driven primarily by utility cost recovery and reduced overall consumption.

Multifamily Water Submetering Challenges and Considerations

Water submetering is an effective management tool with significant financial and operational benefits, but successful implementation requires careful planning. The following challenges can impact feasibility, cost, compliance, and tenant satisfaction.

Upfront Capital Requirements
At the practical level, high upfront capital requirements can prevent investment. However, a holistic evaluation of the payback period, capital budgeting constraints, and financing options can make the investment more feasible.

Diverse Local, Regional, or National Regulatory Requirements
Water submetering is typically regulated at the state and local levels, with requirements that vary significantly between jurisdictions. Some states may have complex billing rules and meter accuracy standards, while others may heavily restrict the types of submetering allowed; others still may require submetering in certain types of development. The risk for owners is that non-compliance can result in fines, legal disputes, and system removals. Therefore, collaborating with an experienced, reputable provider can mitigate these risks by providing a knowledgeable partner.

Retrofit Complexity
Retrofits can be considerably more complex than implementing water submetering from the ground up in a new build scenario. This can result in higher unit costs, longer installation timelines, and greater disruption to tenants. However, working with a trusted provider and experienced installers can mitigate these issues. 

Tenant Pushback and Satisfaction
Many tenants used to RUBS or other allocation-based systems may be resistant to change. Common concerns from tenants include fears of higher monthly costs, perceptions of new and unfair fees, and distrust in meter accuracy. The potential for increased customer service workload due to billing disputes or poor tenant satisfaction can cause some owners to delay investment into new systems, but with clear communication and explanations of billing methodology, tenant concerns can be addressed. Many tenants respond well to the fact that they pay only for what they personally use, and access to unit-level consumption data via app or user portals increases transparency and provides clear data to help resolve disputes.

Data Privacy and System Security

Modern smart water submetering systems rely on connected systems, which introduce technical and cybersecurity considerations. Some landlords may worry about the risk of unauthorized access to consumption data, data breaches in cloud-based platforms, and system outages affecting billing accuracy. However, most modern submetering systems integrate security features into their design, and by partnering with a trusted, reputable provider that meets strong cybersecurity standards, landlords and tenants can be confident that their data is safe.

Ongoing Operational Complexity

A common concern when upgrading to a submetering system is that it introduces new operational responsibilities that property managers may not be ready for. These include monitoring system performance, managing billing cycles, or handling new types of tenant disputes. In some cases, these activities fall entirely onto property managers; in others, they can be outsourced to more comprehensive management services. 

Submetering vs RUBS: What’s the Difference for Multifamily Water Submetering?

The problem with RUBS (Ratio Utility Billing Systems) is that costs are allocated using static formulas, such as occupancy or square footage, rather than actual water consumption. This is a problem for property owners and some tenants, as property owners typically shoulder more of the utility costs, while some tenants pay for water they don’t use, and others don’t pay their fair share. While RUBS is easy to implement, it’s less effective than smart utility management solutions at recovering utility costs and reducing water costs.

Water submetering completely solves these problems by using individual water meters for apartments, condos, or other units. This ensures precise billing based solely on individual consumption and allows landlords to pass utility costs directly to those who generate them. Fair, transparent billing can reduce tenant disputes. 

The table below summarizes the differences between RUBS and water submetering:

	RUBS	Water Submetering
Billing Transparency	Poor transparency	Significant transparency
Implementation	Simple to implement	More complex implementation
Water Consumption	No need to change behaviour	Significant improvement in consumption
Accuracy	Does not track tenant water consumption	High accuracy; actual consumption is tracked

Is Multifamily Water Submetering Worth It?

Multifamily water submetering is worth it. The benefits of water submetering are clear and tangible: reductions in water consumption, greater transparency and fairness for tenants, increased operational efficiency, improved NOI, reduced maintenance costs. These are measurable financial, operational, and tenant-related benefits that make water submetering a compelling investment for property owners.

Water submetering ROI depends on the property. Still, once installed, landlords can recover utility costs from tenants, turning an owner-paid expense into a tenant-paid one. Over the long term, efficiency gains improve NOI and increase property values; in regions with a high water cost, submetering can result in substantial annual savings that maximize long-term financial benefits. These features make it a worthwhile investment for property owners.