Rental Property Utilities Breakdown

[Omer Sultan]

Hello BiggerPockets Community!

I'm trying to figure out the best way to handle my utility expenses on a rental property. I haven't closed on a property yet (I actually haven't even made an offer yet *sweat-smile emoji* <---look that up on Google if you don't know what that is because it's pretty spot-on), but I've got my sights set on purchasing some student housing in a small college town in Upstate New York. Most of the properties I've been looking at are single-family homes that were turned into multi-family homes to accommodate a larger number of occupants. The way I see it, there are 3 options when it comes to billing tenants for utilities:

Option A) There are separate utility meters and the tenants are responsible for paying their own utilities. Simple.

Option B) There aren't separate utility meters, so you charge each tenant a predetermined monthly utility fee. For example: $100 per month per tenant regardless of their consumption (which could end up being higher or lower).

Option C) There aren't separate utility meters, so you charge the tenants a variable monthly utility fee based on their consumption. For example: I receive a total of $1,000 in utility bills on a given month for a single property containing 8 tenants. Each tenant is therefore responsible for their rent + an additional $125 for that month ($1,000 / 8 = $125).

Are there any flaws with any of these options that I'm overlooking? Are there any other options besides these three?

Thanks in advance BiggerPockets Community!