Switching from owner paid heating to tenet paid

[Jason Behrens]

A property I am interested in buying currently has the landlord pay for water, gas, and sewage, while the tenets pay for electricity.  The property uses an oil furnace for heating.  How expensive would it be to disconnect the oil furnance and move heating to electric baseboards?

[Greg Scott]

Jason:

That is an expensive solution for something that can be handled without any investment at all.   Are you familiar with RUBS?

I've heard several acronyms used for it but most commonly Ratio Utility Billing System.   Basically, you use a formula to divide the utility costs among the tenants.  The formula is typically based on the size of the unit and number of people living in it.  So, if you had a duplex with 2BRs on both side but one unit had 3 people and the other just 1, you might have a ratio of 65/35 where one unit paid 65% of the utilities. Various states have laws governing these things to do your research.

In the end, this is the easiest way to get utilities to be paid by the resident.  At your next lease renewal you can implement it and all you have to do is a bit of math every month.