Should Utilities be included in rent?

[Benson Webb]

Hi Everyone,

Im a newbie to the REI game, just purchased my first Duplex in St. Paul, MN and I'm wondering should I include utilities with rent? The water meter isn't separate and gas/electric is set up to where the top unit pays for their own but the bottom unit pays for the unit, the basement, and the common area as well. I'm thinking it'll be easier to put it all in my name and just increase the rent (avg. rent in my area is $1,200) but I'm not sure if it will cause my cash flow margins to shrink.

Any advice is greatly appreciated!

-Benson

[Joe Splitrock]

Originally posted by @Benson Webb:

Hi Everyone,

Im a newbie to the REI game, just purchased my first Duplex in St. Paul, MN and I'm wondering should I include utilities with rent? The water meter isn't separate and gas/electric is set up to where the top unit pays for their own but the bottom unit pays for the unit, the basement, and the common area as well. I'm thinking it'll be easier to put it all in my name and just increase the rent (avg. rent in my area is $1,200) but I'm not sure if it will cause my cash flow margins to shrink.

Any advice is greatly appreciated!

-Benson

 Generally speaking you want the utilities in the tenants name. People are more careful to conserve if they are paying the bill. I had one property years ago where I paid gas and I drove by in January to find all the windows upstairs open. I asked why they had the windows open and they said because it was hot upstairs. The heat was set to 80 degrees! 

Of course in your situation it is more complicated because the gas for one unit heats other areas. You may want to pay just that area or do some type of split with the tenant. 

Also consider what competitive properties offer. If all the other duplex offer heat paid for $1200, then you may need to offer similar to be competitive. 

Welcome to BiggerPockets!!