Up/Down Duplex with 1 washer/dryer - Splitting Utilities?

Question

Hi Everyone, I'm hoping someone can help out on this unique situation. I currently have a duplex under contract here in Saint Paul and I'm trying to get my ducks in a row before closing. The duplex has 1 washer and dryer in a common basement area. The washer is metered (hot water heater + electricity) with the floor 1 tenants, the gas dryer is metered with the floor 2 tenants. Can I legally have them pay their own utilities with this current setup?

I've heard a lot of different answers ranging from yes, you just notify them in the lease, or yes, according to Statute 504B.215 you can, to no, you need a common area meter. I've also quoted putting in a new set of washer/dryer unit so that each side has it's own, but that's not cheap. So confused! Thank you in advance!

James Hamling · Answer

I'd love to say that dosn't happen Ryan, I really would, but it does. So does blinds getting destroyed nearly every tenant, screens being busted out on what nearly feels a daily basis (seriously, wtf is up with tenants busting out screens all the damn time, I mean really, is there some memo they all get on doing this or what). Utilities is that "thing", it's never been perfect, I have heard more ideas and strategies to get it "perfect" than I can count, and have tried countless things. Nothing ever seems to be the magic bullet for this, all I have found is a simpler way and that's coming up with a utility factor per estimated tenant count, and run with it. At lease renewal you evaluate how it went, adjust if need be via the rent increase, move forward for another 12 months. One thing that has seemed to work better has been a 2 stage heating system. Using a forced-air system that has a set temp, tenant's cant change, say 65, and then there is baseboard electric heating in the unit for "boost" heat that the tenant can control, and pay for themselves. Only way to abuse your heat bill is to hurt their electric bill, and we explain it to tenants, works well actually. But when it comes to water, I don't know of a "perfect" solution, just complicated and simple ones.

James Hamling · Answer

@Ryan Chernik If your providing that laundry unit use to the tenants, as an amenity of their lease for say unit 2, and it incures expense to unit 1, no you can not. I mean, sure you "could" but your legally well outside of the lines so if you ever have an issue with either tenant and need to evict, and tenant brings that up in court, it's gonna bite you in the butt. Simplest work around is factor utilities into rents, I know your gonna say "but what if they use more then I factored", yeah, what if, as in exactly how much $ difference can it be? Not that much right, too many act as if it's going to be hundreds upon hundreds, and it never is. All-inclusive rental units are a big plus in tenants minds, which is worth higher rents, and done right is a net profit. Not to mention simple, it's just plain simple and that time savings is worth money too. So, include utilities into rent, raise rents to cover, market the units "UTILITIES INCLUDED" and make life simpler on yourself.

Travis Farleigh · Answer

Nothing really stops a tenant from running heat with windows open aside from simply asking them not to do that if possible. I don't know the legalities of putting a cap on the usage in the lease, but I wouldn't do it either way personally. Rather, look at past usage if you have those numbers and make your best guess as to where the rent should be, and if you need to adjust due to usage, do so when the lease ends. As a side note, I actually put all the util bills on autopay with a rewards card I have (which I pay off monthly) which effectively gives me a 1.5% rebate on utilities, so really paying the utilities for my tenants not only makes them feel better but provides me a secondary, albeit small, source of income.

Ryan C. · Answer

Thank you John and James. I'm planning on just adding the cost into the rent as you said. Do you put anything in the lease in regards to not exceeding a dollar amount with the utilities? As in, since they don't pay them and have responsibility in watching costs, what stops a tenant from running the heat with the windows open?

John Roesler · Answer

@Ryan ChernikI would echo what James said. I have a similar situation duplex up/down and I simply include estimated utilities and the rent. I make out better in the summer when gas is used less and worse in the winter when they’re heating the place.￼