Utilities paid by tenant or landlord?

[Manvir G.]

Hi everyone,

I'm looking into small and medium sized apartments in Windsor Ontario and just wondering how common it is for the utilities to paid for my tenants? Most of the properties I see don't cash flow well but I've seen a few with potential. Some of the properties have very high expense ratios (60%+) and I'm wondering how feasible it would be to bill the tenants for those expenses and actually turn a profit.

The buildings in question are older so I'm not even sure if they're capable of separate electricity and water but I'm inquiring into that possibility from the seller's agents. How expensive is it usually to separate the water and electricity? Would it be easier to bill back the tenants than actually separate everything? How common is this practice in Windsor Ontario? What about other places in Southern Ontario?

I'm new to real estate investing and just educating myself at the moment so any input would be appreciated. Thank you.

[Seth Williams]

Hey @Manvir G. Im no expert on your area but at least in the US this isn't that normal. most buildings round my area have everything separate and thats the best way to bill everyone, well they infect would get billed directly in this instance. If you were going to separate, depending for electrical wiring it can certainly get expensive. Sometimes circuits might be wired and would need to open walls etc and then run separate panels or sub panels, new fuses...Either way, I'm not sure the return would be ideal to start, yet 60% is really high. As far as water, your own your own there..some new construction buildings around here do it that way so you can bill the tenant separate, but I've found that this isn't worth it since the water is relatively cheap. I have coin operated laundry in most my buildings and it covers the cost of water and even makes some money...It also deters the overuse of the laundry haha. Some larger buildings have gotten away with figuring out overall usage and billing it back in the % of occupancy, so a six unit would be divided in sixths, or by square footage. Just trying to help, at least what I've read! Hope this helps & good luck!