PROBLEM: Managing utilities for house hacking and rentals

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PROBLEM: Managing utilities for house hacking and rentals

Patty Yang
Investor · Seattle, WA · Member since 2019 · 19 posts · 3 votes

For househackers and rental property owners:

I find that managing utilities is a menial manual set of tasks every month from checking the bill and sending to tenants, but also can take more time if you have to keep on checking if your tenants pay for it. Do you have the same problem? What are the top problems you face? Has anyone found a way to automate this or tools they use?

I have utilities that needs to be billed in my name(like water) and I also have tenants(in house hacking situation) who have different utilities owed per their agreements(yes i know I probably should change that soon). For example, I have tenants who have utilities included in rent with a cap at $100 so if they go over they pay excess. 

Wondering if people are experiencing this and have found a better way to manage this process. 

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Michael HaasBusiness Member
Real Estate Agent · Sammamish, 🌧️ Seattle Investor-Agent | 🤑 Helped 400+ Clients Invest in Real Estate | 🏘️ Owns 23 WA Rentals & Airbnbs | 🏗️ Built 5 DADU's | 📈 You Can Do It Too · Member since 2016 · 725 posts · 3k+ votes
6y

I'll echo what others have said - I charge a flat fee (in my case, $75) per person for all utilities in my rent-by-the-room homes and do not charge for overages - if I had an assistant doing this I'd consider it, but my time is more valuable than the overage more often than not. If my time is worth about $60 an hour to me and it takes 20 minutes to discover that my tenant owes me $20 I don't actually "make" a cent. Again, if you have an assistant with a $20 hourly rate it could be worth the manual process.

I'd be down for automation though if there was a solution that provided it. I think most landlords doing flat-fee utilities would prefer to bill-through utilities if there was an automatic solution to remove their time from the equation.

[email protected]408-439-7873
HouseHack Seattle | Michael Haas & Team572 Reviews
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  • Daniel Haberkost
    Rental Property Investor · Colorado Springs, CO · Member since 2018 · 682 posts · 729 votes
    6y

    Hi @Patty Yang, couple of thoughts.....

    1.) For the water bill that has to stay in your name, does the bill vary significantly every month? Can you just average it out over the course of a year and have the tenant pay that every month? My rentals allow water to be in the tenant's name but I have a friend who owns several rentals in a water district where that's not the case and that's what he does. 

    2.) You hit the nail on the head with house hacking, I factored utilities into the monthly rent and then advertised the rent as all inclusive with no additional costs for the tenant and if you're able to set up the lease that way in the future it makes it easier. To solve your current situation I'd ask the same question as above, can you average the per tenant monthly utility cost and make an agreement with them to simply pay that fixed cost every month??? 

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  • Patty Yang
    OP
    Investor · Seattle, WA · Member since 2019 · 19 posts · 3 votes
    6y

    @Daniel Haberkost what you mentioned that your friend does definitely makes it a lot easier yet still requires manual monitoring if tenants overuse.. so was wondering if there was some other technique people who house hack or who have rental property use to just automate that whole process. ... not sure if it’s just not that big of a deal.. I’d find it more of a relief since I would want to be monitoring as I’m super attentive to it to make sure overages don’t accrue over time.. but another problem is.. doing this at scale..

    2Reply
  • Mike McCarthy
    Investor · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    6y

    @Patricia Yang electricity and gas are easy here. The tenants set up their own accounts and all I have to do is make sure they are transferred before starting a new lease.

    The gas company here has a ‘Landlord Partnership Program’, where I have to sign up to let them know I’m the owner of the property and agree to help them if they need access to the house and such. In return, they absolve me as the owner of any bills that the tenants don’t pay.

    The electric company does this automatically.

    So that leaves water. I keep water in my name since it’s a pain to switch over and it’s lien-able. In the lease, the tenant pays $50-60/mo for water, that is adjusted every 6 months. So I keep a spreadsheet (or Quickbooks) and every 6 months I do a reconciliation. Takes about 2 minutes per property, and most of the time, the tenant owes $20-40, which is how I plan it... and I ignore it.

    But for those tenants who overuse, they get a bill.

    1Reply
  • Dennis Cosgrave
    Rental Property Investor · Member since 2019 · 304 posts · 462 votes
    6y

    In some municipalities, if the water bill is unpaid, the amount will be added to your property tax bill. Therefore, it makes sense to keep that in your name. As far as the other utilities are concerned, install individual meters and have the tenant hold the accounts in their name. There may be a meter for common elements which of course you keep in your name as well. It can be a little pricey to do but if you are planning to keep the property long term, it is worth the investment. 

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  • Daniel Haberkost
    Rental Property Investor · Colorado Springs, CO · Member since 2018 · 682 posts · 729 votes
    6y

    @Patricia Yang mmm I understand, do they really go THAT far over on a regular basis.

    I could be wrong, but I think if you average it out and just let it be it’ll work out just fine.

    0Reply
  • Patty Yang
    OP
    Investor · Seattle, WA · Member since 2019 · 19 posts · 3 votes
    6y

    @Daniel Haberkost@Dennis Cosgrave@Mike McCarthy thanks for the tips.. i'm just thinking..I may give a try in building some small tool like a utility portal to show all the utilities per door and household and to just set alerts if it ever goes overused. Also, if overused, to be able to automatically charge tenants by customizing based on the lease terms. Kind of like autopay but for utilities. Does that resonate as something house hackers or rental property owners would want or really need for bills that need to be in owner's name?

    Is there anything I am missing that us property owners would absolutely need included? 

     Let me know! Thinking of first starting with Seattle...

    0Reply
  • Daniel Haberkost
    Rental Property Investor · Colorado Springs, CO · Member since 2018 · 682 posts · 729 votes
    6y

    @Patricia Yang I think that’s a viable idea, a lot of people I know would use that if it wasn’t too expensive.

    0Reply
  • Patty Yang
    OP
    Investor · Seattle, WA · Member since 2019 · 19 posts · 3 votes
    6y

    something like this.... chiaqi.com

    0Reply
  • Michael HaasBusiness Member
    Real Estate Agent · Sammamish, 🌧️ Seattle Investor-Agent | 🤑 Helped 400+ Clients Invest in Real Estate | 🏘️ Owns 23 WA Rentals & Airbnbs | 🏗️ Built 5 DADU's | 📈 You Can Do It Too · Member since 2016 · 725 posts · 3k+ votes
    6y

    I'll echo what others have said - I charge a flat fee (in my case, $75) per person for all utilities in my rent-by-the-room homes and do not charge for overages - if I had an assistant doing this I'd consider it, but my time is more valuable than the overage more often than not. If my time is worth about $60 an hour to me and it takes 20 minutes to discover that my tenant owes me $20 I don't actually "make" a cent. Again, if you have an assistant with a $20 hourly rate it could be worth the manual process.

    I'd be down for automation though if there was a solution that provided it. I think most landlords doing flat-fee utilities would prefer to bill-through utilities if there was an automatic solution to remove their time from the equation.

    [email protected]408-439-7873
    HouseHack Seattle | Michael Haas & Team572 Reviews
    WebsiteView Page
    4Reply
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