Rent splitting on a 4-plex

[nepoez]

PS. the topic should be called Utililty splitting, not Rent splitting.

Hi all,

My buddy and I are looking at acquiring a 4-plex in Edmonton. This property`s owner is currently paying for all the utilities and I would like to change that if we were to take over. Right now I am thinking to have the 2 up suites pay 60% of the utils and the 2 basement suites to pay 40% of the utils. I guess this will only start happening on anniversary dates.

My question is, how is this done properly? Are there special legal forms? Has anyone come accross this type of scenario before?

Thanks very much in advance!

Nepoez

 

[MoisheAlexander]

QUOTE (nepoez @ Nov 28 2008, 10:44 PM) PS. the topic should be called Utililty splitting, not Rent splitting.

Hi all,

My buddy and I are looking at acquiring a 4-plex in Edmonton. This property`s owner is currently paying for all the utilities and I would like to change that if we were to take over. Right now I am thinking to have the 2 up suites pay 60% of the utils and the 2 basement suites to pay 40% of the utils. I guess this will only start happening on anniversary dates.

My question is, how is this done properly? Are there special legal forms? Has anyone come accross this type of scenario before?

Thanks very much in advance!

Nepoez


I strongly suggest that you check with the local Rental Housing Board and review any tenant/landlord legislation in that province. In Ontario, for example the existing tenancy arrangement cannot be changed due to the type of rent control legislation in effect here. What you would want to accomplish could only occur after the existing tenants move out since you as a new owner would simply step into the shoes of the current owner.

There may be a landlord self-help group in that province as there is in Ontario which could help you. Before purchasing this 4-plex, you should obtain copies of the last 12-month utility bills to see the costs of that when deciding whether the investment would be profitable.

Moishe Alexander
President, Canadian Funding Corporation
www.canadianfundingcorporation.com

 

[Thomas Beyer]

QUOTE (nepoez @ Nov 28 2008, 08:44 PM) PS. the topic should be called Utililty splitting, not Rent splitting.

Hi all,

My buddy and I are looking at acquiring a 4-plex in Edmonton. This property`s owner is currently paying for all the utilities and I would like to change that if we were to take over. Right now I am thinking to have the 2 up suites pay 60% of the utils and the 2 basement suites to pay 40% of the utils. I guess this will only start happening on anniversary dates.

My question is, how is this done properly? Are there special legal forms? Has anyone come accross this type of scenario before?

Thanks very much in advance!

Nepoez
You have to change the lease. You can`t do that in most provinces on existing tenants.

The new leases for new tenants state the new terms.

Also: which utilities ? water ? electricity (or also called "hydo" in BC or "nucleo" or "radio" in ON) ? gas ?

 

[nepoez]

Hi All,

The utils that the current land lord are paying are gas, and EPCOR. It seems that you are both suggesting that even when the tenants lease is up, I cannot change the term so that they start paying utils. This is in Edmonton by the way.

If this is the case.. that`s no good! Without the tenants paying, the property will produce about 0 cash flow. The utilities are $690/m on average. That`s a big difference. I don`t mind 0 cash flow for a year, but it seems that it will only change if I boot the existing tenants out after their lease is up?

Any suggestions?

Thanks,

Nepoez

 

[invst4profit]

You would probably be much farther ahead putting your efforts into locating a property that already has separate metering. Even if you were to split the cost some how between tenants it is a less than ideal arrangement. It often leads to complaints from tenants making the units less attractive to potential tenants.

There is a better deal just around the corner.

 

[billf]

Hi,

I am not sure about Alberta, but in Ontario part of the new landlord/tenant legislation included a section on smart metering that allowed utilites to be severed from the rent and added as seperate cost. This included existing leases and is meant to encourage energy savings. I believe you have to discount the existing rent by some formula using old energy costs as a guideline. I imagine installing these meters is cost prohibitive but it may be worth looking into the Alberta for similiar legislation. Maybe the government will cover the costs. Good Luck

Bill F