Quote from @Chris Schwagerl:
We use ACH payments, and that's the only way we roll these days. It's so convenient for tenants to pay that way.
*Quick tip, we split utility costs by square footage of units. For example, one side is 1500 sq ft and the other is 500 sq ft, the larger side will pay 3/4 of the utilities.
We have multiple duplexes with only one meter. I did an experiment to see which method was best:
1) Calculate the monthly utility costs and upload them to the property mgmt software - variable costs per month
2) Charge a fixed rate each month. Last year's utility costs +10% inflation. (Extra costs were either added to the last month's rent or given back to tenants as an overpayment refund)
*Note - properties are in Minnesota, so there's a wide range of temps throughout the year.
Which one do you think was the winner? Well, I was wrong.
EVERY TENANT PREFERRED #2.
I know that as a current tenant myself in an apartment complex, I appreciate a flat rate. My only concern with that would be that the tenants would, unintentionally, overuse the utilities since they no longer need to worry about paying based on usage. Currently, my wife and I, pay based on our current usage and are very conscious about how much water we're using, how long the AC is on, turning off lights when they aren't needed, and so forth to help lower those utility costs. In previous apartments when the utilities were charged as a flat rate, we naturally did not keep as close of an eye on that.
Have you experienced an increase in utility usage with charging a flat rate? Or does the overpayment refund mitigate that because the tenants see an incentive to use less of the utilities?
Thank you for the feedback! These comments have been extremely helpful!
