How are you splitting utilities up?

Question

If you have a duplex that has one circuit breaker & one water heater, how are you splitting the utilities? I've heard of folks setting up the "budget" payments through their power and gas company so you pay the same price every month and then you either pay in at the end of the year or they refund money back to you. I'm guessing you just include those utilities on top of rent, but how would you divvy it up? Some were saying to have it based on square footage, so if lower unit is 1200 (3B/1BA) and upper is 950(2B/1BA), would you split utilities 60/40 and bill them that way?

We aren't interested in adding them into the rent. Come winter time, we have a feeling the house could be 80 degrees if tenants don't have to pay for it. Looking for how others split it up.

Thanks!

We aren't interested in adding them into the rent. Come winter time, we have a feeling the house could be 80 degrees if tenants don't have to pay for it. Looking for how others split it up.

Thanks!

Tim Hertz · Answer

@Kelly Conrad

I just have it in their contract that they will pay $40 bucks per month for a water bill on top of their rent, and i'll reimburse them their portion if it averages less than that. Idk if that's the best way, but it beats me having to pay for the water.

Thomas S. · Answer

There is no way to be adequately compensated if your units do not have all separate utilities. It is a pain in the butt and should be avoided when purchasing. After the fact pay the cost to split and have separate utilities.

In the interim your best policy is to jack the rent to include utilities rather than dealing with the  hassles of billing tenants. Not having separate utilities is always high risk for a landlord.

Get the utility costs for the previous two years from your utility company, divide the total by 24 months and add 10% on top of the number. Simply adjust your rents to include that amount.

Tenants always prefer to know what they will be paying every month rather than having it come as a surprise. You will benefit because they can better budget for a fixed known amount.

Make sure you have your tenants on M2M so that if there is a issue with costs you can easily change tenants or increase the rents if your regulations allow.

Kelly Conrad · Answer

@Tim Hertz Awesome! So you just say it's a utility bill that must be paid along with rent on the 1st then?

Tim Hertz · Answer

On my duplex, the water is not split (electric and gas are separately metered.) What I do is I charge per person. For example, I have two people that live in the downstairs apartment and one person lives in the upstairs. So, the downstairs tenants pay for 2/3 of the water bill. The upstairs tenant pays for 1/3 of the bill.  Each person uses roughly the same amount of water (showers, laundry, dishes, etc.) This is the only way I see it as being fair without meters.

As far your question on payments, I have them pay a flat rate (I estimate the average they might use and add a little extra to cover myself). At the end of the year, if their true use average is less than what they paid, I reimburse them in the form of a temporary rent deduction.

I had this same question and this is the best way for me. Both of my tenants are happy to go along with this. Hope this helps.