Make tenants pay for water?

[Stephen Neto]

I am acquiring my first 3 family.  I hate the fact that I have to pay for something the tenants use such as water.  Currently landlord pays water.  After signing and when property is mine, is it reasonable to require the tenants to pay for the water even though all this time they didn't have to pay for it?  

If so I can get an average water expense amount and divide it in 3 and include that figure in the rent.  Does that make sense and sound reasonable?

[Courtney King]

Great question! Anytime I or one of my clients acquires a property where the owner currently pays a utility that should be the tenants I ALWAYS come a up with a plan to change that. I'm speaking from experience in Texas so you may want to check your local laws but here's what I usually recommend:

1. Check the leases. You're only allowed to make changes like this once they are up for renewal or if they are month to month. 

2. If they are month to month or if their lease is about to expire you'll want to give them at least a 30-day notice before the change will take affect. If you renew the lease, be sure the renewal indicates that they will be responsible for utilities starting at a particular date. If you want to keep them month to month but still want them to now be responsible for a certain utility, as long as they get a written notice 30-days before the change you should be good. 

3. Metering - If there's only one meter, I suggest you use some sort of sub-metering system or another system that ensures your calculating this correctly. The property management platform that I use (I'm a Broker that uses a PM platform) has a utility billing system that allows me to bill back utilities to the tenants based on either number of occupants, sq ft, etc. In Texas on larger multi-family properties you actually have to register with the Public Utility Commission so you may want to check your state/local laws.

Last but not least, I make an effort to personally meet all tenants to introduce myself when I (or a client) buy a property. It makes the transition easier and you're able to establish a positive first impression so when you spring this on them shortly after they will be more receptive because you built that connection. 

Good luck! Congrats on this acquisition!

-Courtney