The value of separate meters on a property cannot be underestimated.  Most multifamily properties have one meter for water and maybe separate meters for electricity: in small multifamily properties is normal to have individual electric meters but it's uncommon to have the same with water: that's probably why its often missed.

Below we'll compare two similar properties: one with separate water meters and one with a master water meter and the affects on income and the property value using a cap rate for evaluation.  This is just a simple evaluation to make a point. 

The properties are very similar: the rents collected from the tenants are the within 5 dollars of each other on average so we'll just use the same rents for the sake of being clear.  Also, since other expenses vary like taxes, insurance, maintenance and landscaping we'll reduce the analysis to the water, sewer and trash expenses since the other expenses have no bearing on our topic.

Property One:  4 plex with total rental income of $2,808.00 per month.  The units have washers and dryers in each unit and one master water meter.

Property Two: fourplex with total rental income of $2,808.00 per month.  Similar to the property above the units have a washer and dryer.  In this case the builder put in individual water meters for each units.  There is an additional expense to do this when the property was built: in fact its quite a substantial expense but its of great value to the former and current owners.

what does that mean to the bottom line in the pocket money?

On a monthly basis the owner gains $305.00 additional dollars of income and $3,660.00 yearly.  While this is not a lot of money in itself if you compare the total potential income of the property it translates to 11%. 

What does it mean for the property values?

At current cap rate of 7.75 it's $47,222 in additional value: and at a conservative cap rate of 9.25 it's $39,567 in additional value.

So, if you see two very similar properties priced, each at $310,000 which is better?  Of course the property with separate water meters because your buying for the same price but the value is greater as is the income.  

Even if the property with separate water meters were to cost $25,000 more it's of greater value then the master metered property.  In fact that $25,000 turns into a 15% return on that money and with positive leverage the return would increase.

So when looking at properties look carefully at how they are metered and consider the true value it reflects on your return, because often its substantial.

But there is actually more to it.  Separate water meters have additional benefits to the owner.  Besides the increase in income and value there are no bills to pay, it's much easier to control expenses, and things like unreported water leaks in the toilet will not affect your wallet but the tenants.  This is important in units that have their own washers and dryers: a washer can use up a lot of water that the owner will not have to pay for.

For savvy investors this can provide a way to increase the return on the money invested at the point of purchase and/or at time of sale.