Raise rents or pass on utilities (RUBS)

[Andrew S.]

Hey BP,

I have a 6 unit property that is currently below market rent by $100 - $150 and the previous owner paid for city water, sewer, and garbage.  The property is in a smaller town where water is a flat fee (not metered for the property - shower once per year or water your lawn everyday - same cost).  The city services are $75 per unit. 

Comparable rents in the area are $550 - $600 per unit with included city services.  Mine are $450 with included city services.

The 2 options I'm considering are:

1. Raise rents to $500 in 2 months, $550 after an additional 6 months

2. Keep rents at $450 and assign water bill to tenants

Most renters are long term tenants (1 yr, 6 yr, 6 yr, 9 yr) and have kept their units maintained well. I'd rather they pay their own utilities and deal with that themselves.   Anyone have experiences on which is most likely for the tenants to accept and continue renting?

Thanks!