Including Utilities in Rent Pros/Cons?

Question

Do you include utilities in the total rent? Pros/cons?  Renters are looking for affordable listings, what do you do to make your listing stand out?

Robbie Young · Answer

I’m surprised it hasn’t been mentioned yet, but if the tenant fails to pay rent then you are out that much more money.  You are increasing your possible amount of losses with little upside.

Brad Hammond · Answer

Hey there @Holly Horn, it depends.  It is more customary for single-family homes to have nothing included, and more common for multi-family properties to include water/sewer/trash.  I would not include electric in your rent, as that is just asking for trouble.  Some tenants might like that utilities because it will help them budget.  However, if you offer a lower rental amount you might get more people interested in your listing.  To make your listing stand out, have great photos of the property, a very thorough description, and highlight all the great things about the property and the neighborhood.

Mary Smith · Answer

@Holly Horn We too do not include utilities for our rentals. It just adds more responsibility and liability in doing so. Costs may fluctuate from month to month, and there's some margin of error that you need to account for. Looking at all the cons, we feel like it's best to leave utilities to our tenants to manage.

Dave E. · Answer

@Holly Horn always make the tenants pay utilities. There are no cons.

Genny Li · Answer

I would only do it for furnished rentals, where it's expected. Tenants are far more likely to abuse what they aren't paying for.

Max Gradowitz · Answer

Gas and electric? On your typical property absolutely 10000000% the tenant pays that. I would never offer to pay that as part of the rent, it's not a "fixed cost". If they run up that bill absurdly high, you as a landlord can be losing money fast if you offered to pay that. No way, I would never consider it unless circumstances were such that I absolutely had to.

Now, there are rare exceptions. One property I've seen was a duplex but not separately metered. I think it was unpermitted. Anyway, 2 units, 1 bill each month for both unit's use. So if one tenant uses a ton of power, and the other uses very little, it's not fair to have them split it 50/50 each month. The person I knew that owned that property paid the power bill and just charged higher rent, but they didn't have any other option that was fair to both tenants.

The way I look at it is if any cost is based on how much the tenant uses, they pay it. Most water bills are metered just like power, but I had a property in an area with a mutual water company that charged a fixed monthly fee for water no matter how much water you use (yeah, shocking, but its true!). I rented one place where the landlord paid for the fixed water bill, wifi, and satellite tv for me. All included in the rent. It was awesome. I still paid the PG&E though lol.

Brock Bolduc · Answer

@Holly Horn

We always try to make sure the utilities are the residents responsibility. Unfortunately if water is included it tends to be abused and leaks aren’t reported as quickly as if the resident were responsible for the bill. As others have said it can also create big fluctuations in cash flow. In my area a lot of the older multifamily buildings only have one water meter so we always look to separate it if possible as a way of increasing the net income of the building

John Teachout · Answer

If utilities are in the tenant's name and they don't pay the bill, their utilities get cut off and it's not your problem. If you pay the utilities and they stop paying rent, you still are required to pay the utilities as long as they're in the property. (turning them off is "self help eviction" and disallowed in most states.). In our area, water bills do not follow the property. If a tenant doesn't pay, I don't get billed for it. In some places, this isn't the case.

Bruce C. · Answer

We bought a duplex where the tenant downstairs had elec paid foe by landlord, which was now is. 800 sqft LOWER unit, 300-500 / month elec bill. Went down one day in winter, cold outside, and they had heat full blast. Uncomfortably hot. So of course, they had the windows open.

We got the housing authority agreement and new lease agreement that they paid all utils. Very good cash flowing property now.

Frank Rodrigues · Answer

In my experience, you want as little liability as possible. I want to minimize the headaches that come with rentals due to the unpredictable human element that comes with this type of investment. IMO, it's just not worth it, like the old saying go, sometimes less is more. I hope that helps and best of luck!

Including Utilities in Rent Pros/Cons?

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