All Forum Posts by: Michael G.

Actually, the way we do it is we pay the actual bill, so it always gets paid on time. Then we just add each pro-rata share to our Tenants' next month's bills as Added-Rent due.

It's never been an issue and they always pay it but if push ever came to shove, we wouldn't hesitate for a second to withhold any amounts due from Security Deposits. FWIW, we always send each unit a copy of the building's full water bill plus a brief paragraph explaining the math involved in calculating their share. It's very straight forward.

As I mentioned earlier, we make sure that Tenants agree in their Lease that they are to be responsible for all utilities including water, so it's all up-front & Kosher.

What do you all think?

I am going out on a limb here, and stating emphatically that NO LANDLORD should EVER pay for their Tenants Water Usage. Do you agree?

Here are my reasons:

1.) Personal Accountability: They use it, THEY should pay for it. Landlords don't typically pay for their Tenants' Cooking Gas, Internet, Cable TV, Landline-Phone, Cell-Phone, Electricity, Heating Oil or Gas.... Why should they pay for Water?

2.) Waste: Tenants (Humans, actually) simply don't VALUE what they don't pay for. We used to have a unit where Electricity was 'included' in rent and not broken out. Tenants left lights / AC / heat on all day and racked up crazy bills. Then we got fed up and insisted they pay for it themselves... guess what? Their usage plummeted suddenly. Renters use ungodly, copious, wasteful amounts of things they aren't paying for

3.) Environmental: As a corollary to point 2 above, when Tenants pay their own way, they use MUCH less. This is WAY better for the environment. The less electricity, gas, oil & clean water used the better for ALL of us! Water especially is incredibly expensive to filter & clean and the processing itself expends an incredible amount of Energy

4.) INCREASED NOI: This one's a no Brainer: Lower Expenses for you = More Profit / Cash for you.

EASY RUBS Billing: Before you state that it's complicated b/c Water isnt usually separately metered: No problem. Just apply the RUBS Utility/Water billing system (To anyone who doesn't know what it is, just Google it.) Essentially, you bill each Unit a % of the Building's Water Bill based on Occupancy. If you have 100 Occupants in your Building (Say spread out over 40 units) then each Unit gets billed according to the number of occupants in their Unit. If Unit 1 has 3 Occupants, they pay 3/100ths of the Bill that Quarter. If Unit 2 has 2 Occupants on the Lease, they pay 2/100ths and so on. Easy Right?

This method is 100% legal in most States (Check in your State to be sure) and as long as it's clearly stipulated and agreed-to in your Leases, it's perfectly ok. (We do it, and it's fine!)

SO WHY DO LANDLORDS PAY FOR THEIR TENANT'S WATER AGAIN?

Hi Luis

What was your planned strategy when you acquired the properties?

Answer is very easy. One word for you: RUBS. [water billing.) Google it.

All yo need to do is pay the water bill and then charge a portion to your tenant. This is called a 'recoverable'. How much to charge? Use a % of occupancy. IE. if your unit has 3 occupants and theirs has 2, charge them 2/5ths of the water bill (no markup.)

Just make sure that 1. Its legal in your state/town and 2 that its clearly stipulated in your Lease that Tenants pay all utilities.

PS - do NOT even think about tricking them into paying your water.... Its a douchebag move.

Rod

No way! Are u crazy? Why even consider this? Do you really want to get into paying for stuff your Tenants use? Why stop there? Why not pay for their cooking gas, internet, cable TV, phone, cellphones and electricity? Do you realize how much of something Renters use when they aren't paying for it? Ungodly, wasteful amounts!

We used to have a unit where Electricity was 'included' in rent and not broken out. They left lights / ac / heat on all day and racked up crazy bills. Then we got fed up and insisted they pay for it themselves... guess what? Their usage plummeted suddenly. Good for us, them, and the environment.

Same goes for water. If you pay for this, you'd be setting yourself up to get hosed (pun intended) It will cost you waaaaayy more than you think and you'd be harming the environment because they'll be wasteful with their water use.

Were doing the opposite : B/C our buildings only have one meter, We implemented a RUBS water billing system (google it) per occupant and now each tenant pays their fair share. Guess what? Water use is now, suddenly, magically, wayyy down.

And so are our costs. Our ROI is wayyy UP, happily.

Better for the environment and a win-win for everybody.

Pls do yourself, the environment and all Landlords everywhere a favor: Do NOT ever offer to pay Tenants water bills or other utilities.

Agree with @Dawn Anastasi

You should put the rent at Mkt-rate or even a hair below and then, if you run a decent operation, you should have several applications come in quickly and you wont be in this situation. What are you your wasting time for? Think of all the $$$ you wasted having a vacancy during your 6 open houses

PS: The guy's lyin' big-time. Artist? City commission??? Puh-lllease !!!

@Colleen F.

Colleen: Are you saying that the same insurance co. charges your LLC a different price than to you personally for the exact coverage on the exact same Property?

I didnt even know this was legal!

@Dustan Marshall

Re: Paying yourself(or your LLC) to get the 'Tax Deduction'

Can you please explain the math behind this strategy? One the one hand you'll be 'paying yourself' (or your LLC) and taking the tax deduction for basic service calls to your properties, BUT, on the other hand and at the same time you (or your LLC) will have to declare this income. -$100 for yourself, but +$100 for your LLC. It's a wash.

So what's the tax advantage exactly?

Thanks!

@Eric Y.

I like the Options-Trading Reference! You make a good point about always considering both directions of the street... Good on ya!

@Rick Baggenstoss

I have the same question as @Dawn Anastasi

Why would you never raise rents (ex: if a tenant stays for 12-15 years) when you can simply just raise it a little every year or every 2 years and accomplish the same thing..?