Buying a triplex with tenants no split utilities

[Rachel Degennaro]

Hi, I am in the process of buying a triplex, the 2nd and 3rd floor apartments are both 2 bed 1 bath and are currently rented at 650 including all utilities with no leases. I will be living on the first floor. 

Market rents in the area are about 600-800 plus at least one utility. Both occupants have pets, one has a dog and birds, the other has a cat.

Previous landlord had discount on utilities but I don't.

I want the tenants to sign leases with me, I was thinking month to month leases, but I'm not sure how to price rent with included utilities. Since they are paying next to nothing right now, I'm afraid they only live there because it's so cheap and can't afford more but I need to do the right thing for my finances, also any tips on bringing up the change in rent, first time for me with this.

[Rachel Degennaro]

Thanks @Sean McDonnell ! Have been wanting to do this for a while but was always hesitant to pull the trigger as I don't have any friends/relatives who would do something like this, so i.e. not a lot of support/guidance. 

I was considering doing a year lease as the 2nd floor tenant has been there 10 years, but the 3rd floor tenant just moved in, and judging by her apartment (mattress on the floor, no furniture/couch, ect..) I don't really know if she's going to last a year. 

I guess I liked the somewhat freedom the month to month lease would give me, so if I did want to change to separate meters in 6 or 18 months, whatever, I could just update the lease instead of waiting for it to expire.

I was thinking maybe, getting a report of the past 2 years utilities and adding them up, dividing it up per month per unit to get an idea of what each unit cost in utilities and adding that number to comparable apartments, to come to a fair, fully included price per unit. 

Hopefully, if all goes well after having this unit for a year or two, I'll look to expand and the next one will definitely have separate utilities, you guys got it right!