Handyman · Northville, MI · Member since 2019 · 23 posts · 7 votes
Hey BiggerPockets friends,
I'm looking at a triplex and am trying to estimate my monthly carrying costs for the property. I know my taxes, insurance, mgt payment, and other items like maintenance, cap x and vacancy. However, I have a question about utilities.
I understand the basics of figuring out your utilities estimates (simply calling the provider and asking), however a realization popped into my mind and my question is this: if I'm having my tenants pay ALL utilities, do I need to factor utility expenses into my monthly costs? BiggerPockets has always taught me (podcasts, webinars, etc) that I need to bake these into the cake, but if I'm not the one paying them, why would I factor them into my analysis? Am I right in my thinking? A clarification would be very helpful in me finally finding my carrying costs for ANY property. Thanks so much BiggerPockets community!
If my tenants are paying utilities I do not include it in my numbers. In the event a vacancy occurs, the utility cost is very small and I let the cash flow handle the small number. There is nothing wrong with adding a number say $10 a month I just think it’s insignificant. In my case, I don’t live off of the cashflow it goes towards paying down the principle or buying another unit. Still a W-2 earner and self manage my 20 units.
If my tenants are paying utilities I do not include it in my numbers. In the event a vacancy occurs, the utility cost is very small and I let the cash flow handle the small number. There is nothing wrong with adding a number say $10 a month I just think it’s insignificant. In my case, I don’t live off of the cashflow it goes towards paying down the principle or buying another unit. Still a W-2 earner and self manage my 20 units.
I'm looking at a triplex and am trying to estimate my monthly carrying costs for the property. I know my taxes, insurance, mgt payment, and other items like maintenance, cap x and vacancy. However, I have a question about utilities.
I understand the basics of figuring out your utilities estimates (simply calling the provider and asking), however a realization popped into my mind and my question is this: if I'm having my tenants pay ALL utilities, do I need to factor utility expenses into my monthly costs? BiggerPockets has always taught me (podcasts, webinars, etc) that I need to bake these into the cake, but if I'm not the one paying them, why would I factor them into my analysis? Am I right in my thinking? A clarification would be very helpful in me finally finding my carrying costs for ANY property. Thanks so much BiggerPockets community!
I take into account expenses I have to pay. I consider tenant paid utilities as just that... someone else’s problem. Yes if a unit goes vacant I have a small fee for the utilities. But that’s rolled into vacancy. It isn’t a separate item. I also don’t take into account the tenants grocery bill either, but I’m sure hope they do, because rents due on the first.