Billing back utilities, what's the norm in your area?

[Pat Jackson]

I'm about to have ~100k in HELOC funds (thanks PenFed!). I'm wanting to put in cash offers on 2-4 plexes, get great deals, then turn around and do delayed financing to get all or most of my money back. Financing 100% of a property obviously doesn't leave a ton of cash flow.

I'm interested in properties where after 100% financing, 10% for property management, 10% cap ex, 5% repairs, and 10% vacancy (I'm being cautions, and the necessary utilities, PITI, etc, I can still get $100 a door a month. I'm finding a couple properties that do this (if it's $90 a door and a solid property I'd likely still put in an offer).

What I've noticed is the more utilities the owner pays, the less likely the property is to cash flow well.  This should be obvious.  The best case scenario is the property is completely metered out, and all I would pay is trash and yard maintenance (on top of the aforementioned costs).  The second best case is I pay all that plus water and sewage.  Once I start getting into gas/heat (and certainly electricity), the property just isn't going to be profitable.

And then there's billing back utilities.  I'm listening to the podcasts in order, I'm on 132 now.  I've listened to the topic, billing back seems to be more common in older apartment complexes, but obviously it's not impossible or even hard in 2-4 units buildings.  My main concern is the competition, and how current and future tenants will see having to pay rent, some utilities on their own, AND a pay a bill back.  

The human mind is a curious thing.  I remember an example from my undergraduate pizza hangout.  Below is a paraphrased story this pizza joint had printed on their tables:

A psychology graduate student needed 50 participants to partake in a one hour long survey.  The compensation was $10 cash.  After a month, only 10 participants had come in.  The graduate student came to the pizza hangout and got 40 vouchers for two free slices of pizza (value of $7.50).  Within two days the graduate student had enough participants, and for months was bombarded with requests to take the survey for free pizza.

Case in point, people don't always fully consider the deal they're getting.  

So what's the norm in your area?  What percentage of multis are completely metered out, partially metered out/partially paid for by the landlord, or all utilities are covered with rent?  

On a similar note, any advice on how to bill back and not turn people off or lose them?  I would assume slightly below average rents in a slightly above par unit would be a good start.