Division of utilities for Duplex tenants?

[ahmadbelfon]

We just bought our first investment property. It is a legal duplex in North Whitby, Ontario. We obviously don`t want to pay any of the utilities and we wanted to divide this 60/40 between the upper and lower tenants. We just don`t know what the best way to go about this is. Do we just let both tenants come to an agreement on their own or do we have the upper tenant put all the utilities under their name and have the lower tenant reimburse them monthly. I certainly don`t want to put any bills under my name. What is the best approach to division of the utility bills between duplex tenants to keep all parties happy and to avoid confusion and legal implications?
Many thanks.
Ahmad

 

[tjsills]

Congraulations teriffic news Ahmad, what we have always done is split bill either 2 or 3 ways depending on number of units. You do not want to go on square footage or number of units or you will have tenants arguing someone is using more hydro than they are etc. That`s just one way we find it keeps it simple. Every 6 months we give each tenant a copy of all utilitiy bills and if they have to receive a credit we cut a cheque to them.

 

[SamEfford]

I have found that paying the utilities myself and increasing the rent accordingly works best. That way the tenants can be left unaware of the split and as a wise person once said "Ignorance is bliss"!

 

[ahmadbelfon]

Thank you so much for the response. Just for my clarification - do you put the utility bills in your name and collect from the tenants or do you just let the upper tenant take care of it and settle with the lower tenant. My dilemma is who`s name does the utility bill go under and how can I avoid having the tenants fight over the payments. Thanks for the advice.
Ahmad

QUOTE (tjsills @ Jan 31 2008, 08:04 AM) Congraulations teriffic news Ahmad, what we have always done is split bill either 2 or 3 ways depending on number of units. You do not want to go on square footage or number of units or you will have tenants arguing someone is using more hydro than they are etc. That`s just one way we find it keeps it simple. Every 6 months we give each tenant a copy of all utilitiy bills and if they have to receive a credit we cut a cheque to them.

 

[SamEfford]

Have you already signed a lease?

 

[DonCampbell]

Hi Ahmad,

Check out the shared Utilities Form in the Critical Forms section. That is also a strategy that a number of Members are using

 

[Marek2086]

I`ve had an issue with the tenant heating the place up too much. I find if they`re responsible for a portion of the bill (especially the unit with the thermostat control) they will use it wisely. If their not responsible they may crank up the heat since it`s included. same for electricity.

 

[KeenanTameling]

Hi Ahmad,

There is no hard and fast rule. You must do what is right for you. My advice is to make sure that you minimize any conflict between your tenants. If you don`t mind the hassle of paying the bills all the time raising the rents to cover the utilities is a definite option.
Having them split utilities will make your tenants communicate with each other and nothing is better than if your tenants enjoyed each others company...if there is conflict however you`ve got a management nightmare.
The solution we have found to be good is to have the larger unit get a reduced rent and pay the whole bill. The smaller unit gets utilities included in their rent which is of course higher to compensate for no utility payments. The main savings is in your time managing any conflicts that can occur in multi-unit properties like yours.

 

[RebeccaBryan]

You can also put a locked cover on the thermostat so you set the temperature, if the landlord is paying the bill. Just make sure it`s at a comfortable temperature and you have it in your lease agreement. The thing you have to be careful of is that if you are paying the electricity they could turn around and use a electric heater if they don`t feel it`s warm enough and that could cost you much more.

 

[ahmadbelfon]

QUOTE (SamEfford @ Jan 31 2008, 09:42 AM) Have you already signed a lease?
No I have not signed the leases yet Sam. Any recommendations for the structuring of the lease to include utilities?
Thanks,
Ahmad

 

[ahmadbelfon]

QUOTE (DonCampbell @ Jan 31 2008, 05:20 PM) Hi Ahmad,

Check out the shared Utilities Form in the Critical Forms section. That is also a strategy that a number of Members are using

Thank you for your response, Don. I will use this form. Thank you also for your book Real Estate Investing in Canada which has become my real estate investing bible. It has truly changed my life.
Sincerely,
Ahmad

 

[ahmadbelfon]

QUOTE (KeenanTameling @ Feb 1 2008, 12:24 AM) Hi Ahmad,

There is no hard and fast rule. You must do what is right for you. My advice is to make sure that you minimize any conflict between your tenants. If you don`t mind the hassle of paying the bills all the time raising the rents to cover the utilities is a definite option.
Having them split utilities will make your tenants communicate with each other and nothing is better than if your tenants enjoyed each others company...if there is conflict however you`ve got a management nightmare.
The solution we have found to be good is to have the larger unit get a reduced rent and pay the whole bill. The smaller unit gets utilities included in their rent which is of course higher to compensate for no utility payments. The main savings is in your time managing any conflicts that can occur in multi-unit properties like yours.

Thank you for your response Keenan. This make a lot of sense.
Ahmad

 

[VioletV]

QUOTE (DonCampbell @ Jan 31 2008, 07:20 PM) Hi Ahmad,

Check out the shared Utilities Form in the Critical Forms section. That is also a strategy that a number of Members are using


Hi, Could you please send me the link? Whenever I try to log into the Critical Forms Section, I get an error report. I would be very interested in using this form for my own investments.

Thanks

 

[RebeccaBryan]

It`s in the Members Only section, that`s probably why.