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Renting with Utilities Included

JBagorio

JBagorio

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In a up and down shared accommodation situation, what would be the best way to handle the utilities (Heat, Water, and Electricity). Would it be best for the landlord to factor it into the rent and handle the utilities, or have the tenants split the responsibilities like 60/40 or 55/45 %? I have mixed experiences in the matter and just would like to know your opinions.
 
We use the secondary utilities sharing agreement available from this site and have tenants share them 60/40. We`ve had no difficulties with this arrangement.
 
QUOTE (JNB @ Sep 16 2009, 01:52 PM) In a up and down shared accommodation situation, what would be the best way to handle the utilities (Heat, Water, and Electricity). Would it be best for the landlord to factor it into the rent and handle the utilities, or have the tenants split the responsibilities like 60/40 or 55/45 %? I have mixed experiences in the matter and just would like to know your opinions.

Don`t include utils in your rent unless you absolutely have to. would you turn off the heat if you were not paying for it? make it a fair split...if there are 5 people down and 2 up go something like 60/40 down up. Put one bill in each of their names to make sure the bills are getting paid.

Good luck
Wade
 
In this market of higher vacancies, I found it easier to rent my 1 bedroom basement suite by including utilities.

Also, my nephew was recently looking for a place to stay while attending U of C, and while we were discussing things over with him and his mother, they were emphasizing that they were searching for places with utilities included, so that they had a fixed price to pay every month.

I guess that the tenant profile for a 1 bdrm basement suite isn`t very sophisticated, and neither are their budgeting skills, so this makes it easy on them.

Cheers,
 
The problem with utilities is tenants have no regard for the cost of something they are not paying for. It is all too common for tenants to leave windows and doors open with the heat turned up high in the middle of winter. I have even known tenants to have windows open and turn on the stove to heat with.
The main reason for not having utilities included is if a tenant turns bad you will end up paying hundreds if not thousands for utilities there last couple of months in the unit.
Utilities included might be easier but it is very high risk.
 
Just like some of the other guys mentioned already your better off, not including utilities. cause this way the renters pay for what they use, not if they dont have to pay, then there going to have the lights on all the time, and run the water 24/7, most people dont do that, but you want to cover your self, and your investment.
 
Thanks guys for your input on this. I have been pretty much doing what everyone is saying in the past 4 years, but just recently I have been having to deal with tenants not getting along due to the utility sharing. I do like the idea though of having each tenant own a utility at least to neutralize the responsibilities. It is my first to hear of the secondary utility sharing agreement. I usually just have it included in the rental contract. Could someone share this secondary form? I would definitely like to use it.
 
In Ontario if the tenant does not pay the utility company is the landlord on the hook?

Doug
 
Not if it is in the tenants name however in some cases in Ontario some hydro companies try to tell the LL they are responsible. In that case you simply tell the hydro company where to go. The LL is not responsible for tenant bills and that delinquent account will follow the tenant.
This is why you never have utilities inclusive.
Always confirm with the utility companies that the tenant has in fact put the utilities in there name prior to handing over the keys.
 
QUOTE (JNB @ Sep 16 2009, 08:33 PM) Thanks guys for your input on this. I have been pretty much doing what everyone is saying in the past 4 years, but just recently I have been having to deal with tenants not getting along due to the utility sharing. I do like the idea though of having each tenant own a utility at least to neutralize the responsibilities.

How much trouble would it be to separate the utilities? I have a property that had common heating (forced air) throughout. I switched the upper suites to baseboard heat and left the main floor suite with the forced air. Took some time and effort, but three years later I am glad I did it.

invest4profit is right. If they are not paying the utility, most tenants do not take the necessary steps to conserve.
 
Ease of ongoing management:

- Arguments between units happen over utility costs when not separately metered. Tenants bail over inter unit hatred.

Ease of rent ability:

Certain renters won`t rent if plus utilities. They require the expense certainty. Other prefer it - and if choosing between yours and ten others that are all plus it helps...

Higher net income:

Certain renters will pay more for including utilities than the actual cost of utilities. Less turnover.

It really depends on your particular property / renter profile though.. People do tend to consume more when they don`t absorb the expense... But people are irrational... and if a unit averages $90 / month when tenants pay utilities but $120/month when the landlord pays utilities it can still be a great business renting it inclusive if you can get $200/month higher rent...


QUOTE (JimWhitelaw @ Sep 17 2009, 03:44 PM) Can you tell us why you like that strategy, Adam?
 
All well and good if your primary interest is ease of operating your business but the risk of even one bad tenant in my opinion far out weighs the advantages. You will very likley change your opinion of including utilities the first time you get burned and find out how easy it is for tenants to run up thousands in utilities.
My personal preferance in running my business is to reduce as many financial unknowns as possible. Paying for something I have no control over is too risky for me. Simply not worth the possible higher income if it is not garanteed.
 
I think the biggest factor is the cost of separating the utilities. It may not be economically feasible in relation to the type property you have. In some cases it just does not make sense
 
If you own a property without separate meters there usually isn`t much point in installing them. It`s far better to avoid buying in the first place or sell if the timing is right.
The timing on selling may be approaching fast in Ontario.

I think the new smart meters are going to make a big change in the rental business. The whole ecology thing is going to get tenants on board when they realise the money they can save managing there own utilities. Properties with utilities included are going to become overpriced rent wise and even more unattractive for investor to buy.
Prices may drop but only inexperienced investors may be interested in buying.
 
QUOTE (vandriani @ Sep 18 2009, 02:36 PM) I think the biggest factor is the cost of separating the utilities. It may not be economically feasible in relation to the type property you have. In some cases it just does not make sense

There are certainly cost associated with a conversion, some significant. At the same time though, it significantly increases the value of the property and makes it much more attractive when one is trying to sell. Every property is different, but it should be an avenue to explore.
 
QUOTE (invst4profit @ Sep 18 2009, 04:19 PM) If you own a property without separate meters there usually isn`t much point in installing them. It`s far better to avoid buying in the first place or sell if the timing is right.
The timing on selling may be approaching fast in Ontario.

I think the new smart meters are going to make a big change in the rental business. The whole ecology thing is going to get tenants on board when they realise the money they can save managing there own utilities. Properties with utilities included are going to become overpriced rent wise and even more unattractive for investor to buy.
Prices may drop but only inexperienced investors may be interested in buying.

Thanks for bringing up the smart meters. I looked it up right away sounds like it will be more efficient
 
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