What utilities are paid by owner for a duplex?

Question

Hello, I'm looking at a duplex in the Columbus area. Wondering if anyone knows what is common for amenities provided by the landlord. Are renters paying electricity, sewer, water, trash, etc. Most likely house is not separate meters so, I guess I would need to put water and electricity in the rent?

Chris Wilson · Answer

It depends. You could have the tenant pay for all the utilities, but I would only recommend that if that is the normal thing for that area. In Saint Louis MO for example the owner would typically pay the Water, Sewer, and Trash. These utilities can't be separated like by unit like how gas and electric can. I would suggest finding the averages of those three main utilities build it into the rents.

Nathan Gesner · Answer

If it's on a shared meter, you need to include it with rent or split the bill and charge the tenants. If it's on separate meters then each tenant should set up their own utility account.

HOW TO SHARE UTILITIES 101

You have a property with two or more units and the utility meters are shared. There are a few options.

1. Pay to separately meter the utility. This can be very expensive and is usually the worst choice to make because you can't justify the cost.

2. Charge the tenants a higher rent rate and include utilities with their rent. This is the simplest method, but it also means your tenants are more likely to abuse the utilities by leaving windows open with the heat or A/C running, leaving lights on, ignoring the toilet that constantly flushes on its own, etc.

3. Pay the bill yourself, then reimburse yourself by charging the tenants based on a formula. This takes a little more work, but it's the most fair and reduces the likelihood of tenants that squander utilities.

If you choose #2 or #3, there are considerations:

Start with an average. Use varies throughout the year. Heating costs go up in winter, as does electric due to the reduced natural light and people being indoors more. Electric can also spike in the summer with A/C. Contact the utility provider and get an historical average based on the last year of use. It won't be 100% accurate, but it will be close enough. I recommend you do this each year to adjust for utility increases and other variables. If your average heating bill is $150, you may not collect enough in the winter months when the bill reaches $225 but you'll collect extra in the summer when it drops to $65. If you base your tenant charges on the historical average, you should come very close to collecting the entire amount over a one-year period.

Charge a higher rate. If the water bill is $100 a month, increase the price by 20% (or whatever you decide is fair) to compensate you for the time required to split and bill and to cover additional use when tenants squander the utility. If the bill is $100 a month split between four units, increase it to $120 and charge each tenant $30.

How to calculate charges. Don't make it harder than it has to be. If you have four 2bed/1bath units with the same appliances, split it four ways and call it a day. You can make minor adjustments based on the type of appliances (dishwasher, clothes washer and dryer, air conditioning, etc.) and the size of the rental. If Apartment A is a 2bed/1bath with washer/dryer and Apartment B is a 1bed/1bath with no washer/dryer, Apartment A should pay a higher rate. Another option is to split the cost based on the number of occupants in each unit but this also means you'll need to adjust the charges as tenants move in/out, so it requires more work and I wouldn't recommend it. I recommend a simple spreadsheet to check your math and it will make it simple to adjust each year.

End the complaints. Tenants may complain about your method of calculating how much each unit pays. They think it's unfair because they only shower once a week but they can hear the upstairs neighbor showering twice a day. You can put an end to this by showing them an actual utility bill. Why? Because a large percentage of the charges are base fees that do not change based on use!

I just looked at a utility bill and it has a total charge of $184.12 but $116.50 is from base fees! If I divide this bill by four units, each tenant would pay $46.03. If they were separately metered, each tenant would pay the $116.50 base fees and their individual use, which would be 3x higher than what they pay when sharing a meter.

There are a lot of options out there, but don't make it more complicated than it needs to be. Tenants actually save money when using a shared meter, so there's plenty of room for error when calculating how to distribute the charges.

Isaac Lane · Answer

I have a duplex in the Columbus area. I have the renters pay electricity, sewer, and trash directly. The water is in my name and I have it billed back to the tenants.

Marcus Auerbach · Answer

The Midwest has typically 2 types of duplexes: houses that were originally built as a two family and houses that were originally built as a single family and then later converted into a duplex. I jokingly call the latter a one-and-a-half-plex. They often have one joint mechanical and utility system, which is far from ideal for an investment. Also access to the upper unit is often trough the narrow back stair case - often impossible to bring furniture upstairs without disassembling. And certainly no king mattress. In Milwaukee they can often be identified by the address: they have only one street number, sometimes A and B.

We have a lot of duplxes that were designed and built for 2 units. The original house hack by German immigrants if you will. They usually have independent gas and electric for each unit, but only one water meter. So while tenants pay for their own power, water and sewer is paid for by the owner. RUBS is impractical, but it's not really an issue. One way to deal with it is to set expectations for water use. If it exceeds a certain amount by quarter it will be reflected in future rent or be paid outside of rent. We had a tenant once who got an inflatable pool for the kids and so we have had to have that discussion, but that is really an exception.

Trent Ecklar · Answer

I never pay for another person‘s utilities. If you’re paying for someone’s water bill they will have no vested interest to let you know if there is a leak.

The property should either be submetered or have a property manager willing to do a RUBS system a ratio utility billing system and bill back the tenant for equal portions of the quarterly water bill divided by the quantity of units if the tenants are not satisfied with that arrangement they can rent somewhere else to rent.

Shiela R. · Answer

@Michael Mastantuono, it is common for renters to pay utilities in Columbus.  BUT, I'm posting bc my dear friend who is an investor and agent in Columbus, OH got a $2500 water bill after a tenant moved out.  Water goes back to the owner upon no payment. So I totally disagree about paying for other's utilities.  I was taught to pay water bc if not paid it can be a lien on the property and water usage can tell you a lot about what's going on.  Suddenly, usage is way low. Did tenants leave the property abandoned?  Too high?  Do they have an additional person living there? A pot garden?  a leak?

Patrick Drury · Answer

@Michael MastantuonoTypically, water is in the landlord's name because it stays with the property and is back billed to the tenants. If the landlord is really old they might pay for the water. Check the leases. Renters pay for electricity, sewer, water, and trash typically in Columbus.

Garrett Bradshaw · Answer

not in Columbus, but Texas. As of this moment our tenants pay electric, We pay sewer, water, gas, trash. though when leases renew we will be passing on the cost to the tenants.

Ashley Cross · Answer

I own a couple of duplexes in Columbus and looking to purchase another and they're all metered separately except for the water. The tenants can be responsible for all utilities. However, the water will be in the owners name. For one duplex I cover it because I just accounted for it with the rent. But for other properties, I charge the tenant.

Alfath Ahmed · Answer

From my experience, owner's typically pay for sewer and garbage, and water if the property is not sub-metered. Tenants will usually pay for electric and gas.

If you want you can always sub-meter your property or charge them a flat-fee every month for water. We own 400+ doors. If you ever have questions or simply want to learn more, send me a text!

What utilities are paid by owner for a duplex?

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