Shared utilities for rental suites

[Wayne]

I`m planning on buying a up/down suited detached rental property. How do I address the utilities ? I`ve seen some properties with seperate meters which would make this situation easier. How do the tenants share this resposibility ? Please advise me as how to deal with this.

I will be an out of town landlord.



Thanks,

Wayne M

 

[Allie]

The most common structure I`ve come across is a split of 60% upstairs and 40% downstairs. I`ve done some research and separate meters after the house has been built would be cost prohibitive and will not make sense for buildings with few units.

 

[Nir]

How about an all inclusive rent where you include 60% of the average monthly utility in the upper unit`s rent and 40% of the average monthly utility added to the lower unit.

Example:

Average monthly utility costs based on last year`s bills = $200
Market rent of upper unit NOT including utilities = $1000
Market rent of lower unit NOT including utilities = $800

Your ALL INCLUSIVE rents:
Upper unit - $1,120
Lower unit - $880

Cheers.

 

[CarrieKoch]

We have one particular owner who charges a $250 utility deposit upon move in. He then bills the tenants with copies of the water/sewer/hydro/gas and splits it depending on the size comparison of the units either 50/50 or 60/40. The deposit covers utilities when they move.

It is always a bit harder to collect on utilities when they aren`t included and most tenants prefer the inclusive rate. But it`s not impossible to rent with this system.

 

[housingrental]

Carrie - Utility deposit illegal though correct ?

 

[JoefromTO]

QUOTE (investmart @ May 5 2009, 08:11 PM) How about an all inclusive rent where you include 60% of the average monthly utility in the upper unit`s rent and 40% of the average monthly utility added to the lower unit.

Example:

Average monthly utility costs based on last year`s bills = $200
Market rent of upper unit NOT including utilities = $1000
Market rent of lower unit NOT including utilities = $800

Your ALL INCLUSIVE rents:
Upper unit - $1,120
Lower unit - $880

Cheers.

It`s important to note that it is illegal to profit on utilities and cable. But the example provided by investmart is good. What I would do is inform the tenants that you will charge as he suggests, but its not all inclusive...because that gives the impression that the utilities are included, when in fact they are not.

What I would do is tell the tenants that I will collect the rent plus utilities and at the end of the year, I`ll provide copies of all the utilities statements. If the tenants have used less, you cut them a cheque back for the difference, using the same 60/40 split. If they go over, collect it from them, or let it go depending on how much it is.

 

[CarrieKoch]

Not sure if`s it`s illegal??? He does it and no one has said anything....we have a written agreement on move-in that states everything and that it will be used to pay utilities upon move-out.

I couldn`t find anything about it on the LTB under deposits. Doesn`t really state.

 

[JimWhitelaw]

We used the tenant`s utility sharing agreement available on this site. Main floor tenants have utilities in their name, lower suite tenants pay them their 40% share. The important part is screening the tenants carefully, which you must do in an up/down sharing situation to make sure they are compatible. Similar schedules, lifestyles, and used to sharing a home or having roomates. Decent people who get along are much more likely to treat each other well.

 

[BrianPulis]

On several of my duplexes I have successfully been able to charge utilities seperatly. I split the bills 60/40 for a 3 up and 1 down and 50/50 for 3 up and 2 down. I do collect a utility deposit, my understanding of this is that it can not be forced onto the tenant. If they decline payment of the deposit your out of luck. In six years and six dulpexes this has only happened once. Although this system has many drawbacks I take confort when driving by the units in the middle of winter and see windows open. When comparing what I can get for rent if I were to include the utilities I cashflow an additional $100 minimum per dulpex. I keep track of the utities of all my properties and all the duplexes range from $250 to $300 per month in utilitiy costs.
Some of the drawbacks include;
- having to chase tenants for payment. Often falling behind...I charge a late payment fee which helps
- bills are at least 45 days behind. Therfore when a tenant moves out it can be at least 45 days before you can invoice the tenant. Most often the tenant has moved on and your not able to collect. (the deposit covers most of this providing you don`t let the tenants fall behind)
- my bookkeeper prepares the statment each month, but if you do your own bookkeeping this can be a hassel to prepare each month.

Be sure to have utility split documented in your lease but I also recommend that you have the tenants sign the utility sharing agreement provided by REIN.

 

[housingrental]

I believe but I`m not certain that:
if this is presented as a requirement to the tenant / applicant it`s illegal
if its an option than its okay BUT tenant doesn`t have to pay it if they don`t want to, even if they already agreed to it.


QUOTE (epmrentals @ May 6 2009, 11:43 PM) Not sure if`s it`s illegal??? He does it and no one has said anything....we have a written agreement on move-in that states everything and that it will be used to pay utilities upon move-out.

I couldn`t find anything about it on the LTB under deposits. Doesn`t really state.

 

[housingrental]

I like this post, however would like to add that in certain markets and renter profiles the opposite is true - you will get higher net rent with utilities included.

QUOTE (BrianPulis @ May 11 2009, 08:55 PM) On several of my duplexes I have successfully been able to charge utilities seperatly. I split the bills 60/40 for a 3 up and 1 down and 50/50 for 3 up and 2 down. I do collect a utility deposit, my understanding of this is that it can not be forced onto the tenant. If they decline payment of the deposit your out of luck. In six years and six dulpexes this has only happened once. Although this system has many drawbacks I take confort when driving by the units in the middle of winter and see windows open. When comparing what I can get for rent if I were to include the utilities I cashflow an additional $100 minimum per dulpex. I keep track of the utities of all my properties and all the duplexes range from $250 to $300 per month in utilitiy costs.
Some of the drawbacks include;
- having to chase tenants for payment. Often falling behind...I charge a late payment fee which helps
- bills are at least 45 days behind. Therfore when a tenant moves out it can be at least 45 days before you can invoice the tenant. Most often the tenant has moved on and your not able to collect. (the deposit covers most of this providing you don`t let the tenants fall behind)
- my bookkeeper prepares the statment each month, but if you do your own bookkeeping this can be a hassel to prepare each month.

Be sure to have utility split documented in your lease but I also recommend that you have the tenants sign the utility sharing agreement provided by REIN.