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Splitting Utilities for 2 family dwelling

Discussion in 'Ask A REIN Coach (Certified REIA)' started by Andrew11609, Apr 3, 2018.

  1. Andrew11609
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    Andrew11609 New Forum Member REIN Member

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    Hi,

    I have a bungalow with a 1 bedroom unit downstairs and a 2 bedroom unit upstairs. The house has only one meter and the thermostat is on the main floor. I am currently looking for tenants for both units.

    As is, the tenant downstairs will pay 40% of the utility bills and the upstairs unit will pay 60% of the utility bills. A common concern I am getting from potential tenants is that they do not know how much either tenant will be using, therefore they cannot predict what 40% or 60% looks like.

    I am looking for some possible responses to this concern. Also, maybe there is a solution I am not seeing...

    Thanks,

    Andrew
     
  2. Tina Myrvang
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    Tina Myrvang Client Care Specialist Staff Member REIN Member

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    Do you have your last 12 months of bills? Add up all 12 then divide by 12 to get an average and then do the calculation on that figure. It might help them get some perspective of what they will be paying each month.
     
  3. Matt Crowley
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    Matt Crowley Senior Forum Member Registered

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    Fixed utilities is easier. Add addendum with
    - discount if below threshold (if in renter's market)
    - billed for 100% of house if bsmt / main floor vacant
    - utility cost will increase if usage increases
     
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  4. Andrew11609
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    Andrew11609 New Forum Member REIN Member

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    Hi Matt,
    Let me try and understand this correctly. I took Tina's advice and got the average bills for the past 12 months. The total for Electricity, Water and Gas came to $225 per month.
    Let's take the lower unit for example....40% of $225 is $90. You are saying add the $90 to the rent for a fixed rent. If amount is below that they will receive a discount, but if it goes above that they will see an increase?
     
  5. Matt Crowley
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    Matt Crowley Senior Forum Member Registered

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    I'd set fixed utilities at $120. Offer a discount if they come under after 12 months. If $120 doesn't cover utilities then I have an addendum to increase utilities. Most people would rather pay a fixed amount, I'd provide as little detail around it as possible.
     
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  6. Novice
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    Novice New Forum Member REIN Member

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    That"s an awesome tip, thank you

    Sent from my LG-H831 using myREINspace mobile app
     
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  7. Sherilynn
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    Sherilynn Senior Forum Member REIN Member

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    Agreed. Average last year's bills and round up slightly to cover cost increases. Then decide on a fair split and detail the terms in a Utilities Agreement as an addendum to the lease (if allowed in your province).

    Utilities Agreement should NOT mention the percentage split, but rather state a fixed amount that is "subject to adjustment periodically and/or at the end of the lease."

    The reason for this is that if you state the tenant is responsible for 40% of the bills, then even if the other unit is vacant the tenant need only pay 40% of the bills. If you state a fixed amount that is subject to adjustment, you're covered regardless of whether the other suite is occupied.
     

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