All Forum Posts by: Elaine Lau

Here’s my situation.

I have a house I’m renting out to two different tenants, with their own separate units. 

Tenant A has a family of 5 and rents the main part of the house. The terms of the original contract was that I would have the utility bills in my name, and tenants would pay for utilities on a per-head basis. So, Tenant A would pay for 5/6 of the utility amount. Tenant B, a single person, would pay for 1/6 of the utility amount.

When Tenant A moved in, he and his wife took over all of the utility bills without asking me. Tenant A reassured me that he would provide the utility bills every month so that Tenant B would know how much to pay for utilities.

It’s been almost a year and Tenant A has never once sent me any utility bills, saying they are busy. At this point I think they just don’t want to share how much they are paying for utilities.

So I ended up in this situation where Tenant A complained that Tenant B was not paying utilities. But Tenant B did not know how much to pay! Tenant A was stubborn and did not want to take the time to share actual calculations of the actual utility bills.

To solve this issue of Tenant B not knowing how much to pay for utilities every month, I asked Tenant A and Tenant B for verbal agreement for an estimation of the utilities that Tenant B can pay per month, we all agreed on a monthly estimate that seemed reasonable. $60/per month for Tenant B.

Tenant B agreed verbally on this, but ever since that agreement he still neglected to include the $60 as an estimate for utilities in addition to his rent.

I can’t make him pay it, since I do not have the actual utility bills. But I had already agreed to forward $60 / month to Tenant A every month, so Tenant A is now paying $60 less in rent per month..

What would you do in my situation?

@John-David Herlihy it is 15 units.

Thanks everyone for the replies! Super helpful. 

I am a new real estate agent selling a Multi Family Apartment Complex for my first client. I am working with a broker as mentor, and trying to get some opinions.

The seller, my client, thinks it is worth about $300k more than my mentor/broker thinks it is worth.

My client is making his calculation based on previous year's Expenses. This makes the selling price $300k higher than the numbers you would get from calculating the price based on a potential buyer's expenses. Mainly because you are calculating using a Property Tax based on the last price.

My client argues that it is reasonable to use current expenses to calculate the price, because you are supposed to create a selling price that is the most attractive for the seller (higher price). Broker/my mentor is suggesting to be realistic, and present a price that reflects what the new buyers' expenses would be.

Is it more of a standard practice to calculate the price based on current owner's expenses, or future owner's expenses? Will the potential buyer ask to see the numbers and ask for verification (thus making it difficult to prove the numbers for a future owner)? That's one of the concerns of my client.

This is tough situation because this is my first deal. I don't want the listing to go stale if the price is what my client wants it to be, and is too high. At the same time, I somewhat agree with my client that their price is not too high based on current market conditions.

Thank you so much in advance.