Utilities paid by tenant? Chicago

[Kevin Hunter]

Good evening BP community, I’m checking in to get a few thoughts related to utilities being paid by the tenant. What’s the standard in Chicago for what utilities tenants are responsible for these days? I have a multi-family property in the East Side neighborhood. Tenants pay own electric but building also has individual furnaces. When I bought Previous owner was paying for heat but had “Lockboxes” on thermostats in units to minimum 68 degrees. Should I remove lockboxes and push costs to tenants? I suppose I should also ask myself if that costs would push them “over the edge” from being able to pay rent. Also is anyone charging individually for water/garbage, on top of what they collect in rent? Just wondering how you’d assess that accurately. Building is 2 unit plus garden unit. Any insight is greatly appreciated!

[Crystal Smith]

Quote from @Kevin Hunter:

Good evening BP community, I’m checking in to get a few thoughts related to utilities being paid by the tenant. What’s the standard in Chicago for what utilities tenants are responsible for these days? I have a multi-family property in the East Side neighborhood. Tenants pay own electric but building also has individual furnaces. When I bought Previous owner was paying for heat but had “Lockboxes” on thermostats in units to minimum 68 degrees. Should I remove lockboxes and push costs to tenants? I suppose I should also ask myself if that costs would push them “over the edge” from being able to pay rent. Also is anyone charging individually for water/garbage, on top of what they collect in rent? Just wondering how you’d assess that accurately. Building is 2 unit plus garden unit. Any insight is greatly appreciated!

I can't say what the standard is but I can comment on what we have done in the past and what I  know many do.  1st off if you purchased the properties with leases in place that state the landlord is responsible for the heat then you cannot take the lockboxes off.  When it comes time to renew the lease you can present the tenants with a lease indicating they will now be responsible for their own heat.  Since you'll be saving a little money you may even be able to reduce their monthly rent.  

Regarding garbage- Since garbage is a fixed cost we don't charge separately.  It's already reflected in the tenant's rent so no need to charge them separately.

Regarding water. We have 2 scenarios. In one scenario we don't bill direct for water but the cost is reflected in their fixed rent based on what it cost us over the past year.  The challenge in this scenario is on occasion we've received some outrageous water bills and had to wait to increase the rent the next year to make up the difference.  Receiving an outrageous water bill is usually an indication that something is wrong (usually a leak).  In the 2nd scenario the tenant is responsible for water.  We get the bill, pay it and back bill the tenant. We only did this with single family homes.  We'd do it on multifamily if they had separate meters for water.