Living with tenants and dealing with utilities

[Nick Jensen]

So my wife and I came up with this kooky idea to build a cottage in the backyard in which we'd live so we can rent out our main house. The main house is 2br/1ba 970sqft. The cottage is 250sqft.

We're not quite sure how to deal with the gas and electric bill. Here are some options:

1 - Gas and electric is included in rent

2 - We split the bill (for example: tenant pays 2/3, we pay 1/3)

3 - Tenant pays total bill

#1 doesn't sound appealing. We use VERY little gas and electricity, and we're afraid a typical tenant will be cranking out the watts and therms. #2 sounds good, but we're not sure if this kind of thing is normal/legal in California. #3 sounds even better, but not sure the tenant would like paying for us and the whole potential for legal issues.

What option would you choose and why?

[Elizabeth Colegrove]

@Nick Jensen

What about if you did a cap in the lease.

Rent includes utilities up too X. . Anything above will be paid by tenant.

.....

This is becoming the new "Thing". The military bases are starting to do this practice to discourage waste.