How to incentivize tenants to use less utilities?

[Andrew Eberhard]

I am currently looking into a duplex that unfortunately is not separate metered and has electric baseboard heaters. As anyone who lives on Ontario, Canada will know energy costs are now extremely high and it's really cold in the winter! Which brings me to my question, if I was to purchase this property, is there anyway of creating an incentive for the tenants to turn down the heat and use less? Thus lowering my cost of utilities and increasing cash flow :)

[Scott Reilly]

Sam brought up a good point. Large apartment communities often use a system called (RUBS) Ratio Utility Billing Systems. You can develop a formula based on square footage and number of occupants per unit, i.e., the % of the bill paid by a person occupying a one bedroom unit will pay a smaller % of the overall bill as 4 persons occupying a two bedroom apartment.

Here is an article for your review:

http://www.multihousingnews.com/news/national/increasing-revenue-not-rents-with-utility-billing-systems/1004044409.html

Also, if you choose this type of plan, you will need to revise your lease agreement to explain that monies paid are first applied to the utility bill and the remainder is paid for rent. At least in Illinois, we can do this and if needed go to eviction court over unpaid RENT. A renter can try and argue that they have paid the rent and not the utilities; however, your lease will reflect your updated policy. You may want to contact an attorney in Ontario regarding the lease contract.