Does Submetering Save Money? ROI for Apartment Owners
Last reviewed October 2026Reviewed by Grant Forehand, Compliance Officer, 20 years with NES
For most properties, yes. Water use typically drops 15 to 30 percent and payback averages 12 to 18 months. Results vary; see the NOI math from a real case.
Does submetering save money?
Yes, submetering saves money for property owners by shifting utility costs from an absorbed operating expense into a direct resident expense. Most properties earn back the installation cost within 12 to 18 months, and some recover it sooner. Once residents pay for their own water, property water consumption typically drops 15 to 30 percent. Between that reduced consumption, direct expense recovery, and catching leaks early through daily monitoring, owners stop absorbing master-meter bills. The recovered utility cost goes directly to net operating income every year after the initial payback period.
The numbers below are averages and one real case study. Results vary with your water and sewer rates, how the units are plumbed, the meter type and the size of the property, so treat them as a starting point and let NES run your own bills.
This guide is for owners, managers, and board members of apartment communities, condominiums, and mobile home parks with 80 or more units. You will see how utility recovery works, what equipment costs to install, and how lower consumption affects your budget. By the end, you can evaluate your own utility bills and decide if submetering fits your property.
How submetering creates savings for property owners
When a multifamily property operates on a single master utility meter, the owner pays the entire city bill each month. That cost is either buried in the rent or absorbed as an overhead expense. Neither approach protects your budget when utility rates increase.
Installing private submeters behind that city meter changes how utility costs flow through your accounting ledger. The total property bill is no longer an uncontrollable cost. Savings come from three places: direct recovery, lower water use, and catching leaks early.
Direct cost recovery from residents
In a master-metered building, an owner pays for every gallon of water used inside every apartment. That includes long showers, laundry, and running kitchen faucets.
With water submetering, each home gets its own meter to track individual consumption. Every month, residents receive a bill based on the water they actually used. They pay for their usage, and those payments reimburse the property. The owner pays only for common-area water use, while inside water costs are recovered.
Lower resident consumption
People treat utilities differently when they are free. When water is included in the rent, residents have little reason to turn off the tap while brushing their teeth or report a running toilet in the back bathroom.
Once residents pay for their own water, water use typically drops 15 to 30 percent. Lower consumption means the city sends a smaller master bill to the property. This drop in usage is one of the main benefits of submetering.
Early leak detection
Plumbing problems can stay hidden for weeks in a master-metered building. A slow flapper leak in an upstairs toilet often goes unnoticed until the next bill arrives. By then the water is already on the bill.
A single running toilet can waste 200 or more gallons a day. If three or four units have bad toilet flappers at once, the property can lose thousands of gallons every week without anyone spotting standing water.
Modern wireless submeters report several times a day. NES offers daily leak detection through its MyReads portal, which flags continuous flow. If a toilet runs all night, the portal flags the unit so maintenance can swap the flapper before the bill climbs. Learn more about catching plumbing issues through MyReads leak detection.
The NOI math and real property performance
Recovered utility costs go straight to net operating income. When you lower operating expenses, net operating income rises dollar for dollar, and higher NOI raises what the property is worth.
To see how these numbers look on site, take a 337-unit community from NES property records. NES added meters as leases renewed, so for a while about half the units were submetered and half were still on the master meter.
Not yet metered
- Units
- 169
- Total gallons
- 987,900
- Gallons per unit
- 5,846
- Average bill
- $84.72
Submetered
- Units
- 168
- Total gallons
- 649,800
- Gallons per unit
- 3,868
- Average bill
- $54.22
All figures are per month, from NES property records, taken about halfway through a rollout that added meters as leases renewed.
At one 337-unit community, NES added meters as leases renewed, so for a while both setups ran side by side. The 168 submetered units averaged 3,868 gallons per unit per month, 34% less than the 5,846 gallons used by the 169 units not yet metered. Their average bill was $54.22 a month against $84.72, 36% lower, or about $30 per unit. Across all 337 units, that gap is worth roughly $123,000 a year.
You can review similar property outcomes in our case studies.
Can you make money with submetering?
Submetering recovers cost; it is not a profit center. In most states owners bill at the utility's cost, with a fee only where allowed. You cannot buy water from the city at one rate and sell it to residents at a markup.
The total billed to residents never exceeds the property's master-meter cost. Common-area use stays with the owner. Water for lawn irrigation, swimming pools, clubhouse bathrooms, and shared laundry rooms must be paid by the property.
Some jurisdictions allow a billing fee to cover meter reading, software, and customer support. NES has an in-house compliance team that tracks state, county, and city rules. Our team checks the rules for your exact address before setting up billing, including requirements from the Public Utility Commission of Texas or the North Carolina Utilities Commission. You can check regional standards under submetering laws.
Submetering protects your budget from rate increases even without a markup. When the city raises water rates, the increase follows each resident's use instead of coming out of property funds.
What residents save under individual metering
Billing residents for water can raise questions about lease renewals. Owners often worry that tenants will object to a separate utility bill. In practice, residents usually adapt once the system is in place.
Under a master meter, careful residents pay for their neighbors' waste. A tenant who travels three weeks a month pays the same share as an apartment where five people run laundry every day. That extra cost is baked into the rent for everyone.
With submeters, residents pay for what they use. A careful household pays less than they would under a flat charge or a split bill. They can control their own utility costs by turning off faucets and reporting leaks.
When submetering does not pay off
Submetering is not the best choice for every property. Certain conditions make equipment hard to justify financially.
- Fewer units. NES focuses on communities of 80 or more units. Properties with fewer units face higher equipment costs per door and are often better served by a small-property provider.
- Cheap water rates. When city water and sewer rates are unusually low, the dollar amount recovered each month is small. A low bill means the install takes longer to pay back.
- Complex plumbing. Water submetering works best when a unit has a single main water line with room for a meter. If a unit is fed by several risers, it needs several meters, and the cost climbs. If a water heater has to be moved to reach the line, that unit costs noticeably more.
- Local billing rules. Some local rules limit resident billing or cap fees so tightly that recovery is difficult. In those locations, submetering may not be practical.
When plumbing makes meters hard to fit, ratio utility billing (RUBS) can work instead. Ratio billing splits the master bill by a formula such as occupants or square footage without installing meters. You can compare both approaches in our guide to submetering vs RUBS. We also review physical hurdles in our guide on submetering disadvantages.
How to estimate your return on investment
Submetering installation averages $150 to $300 per unit. The price changes with how many meters each unit needs, the meter type, indoor or outdoor meters, and new construction or retrofit. The biggest variable is access to each unit's line: if a water heater has to be moved to reach the line, that unit costs noticeably more.
When a water line is easy to reach, a meter goes in in under 30 minutes. Water is off only briefly, residents get notice first, and no one moves out. Equipment and resident billing are usually live within a few weeks to about 90 days. NES offers financing for properties that qualify.
Most properties earn back the install cost in 12 to 18 months from the cost they recover, and some sooner. You can test your own numbers with our ROI calculator or read more on submetering cost. To build a complete model, we review 12 months of master-meter bills alongside your unit count.
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