I'm looking to purchase an apartment complex that was previously offering all bills paid. The current owner is spending a high percentage of the expenses on utilities and my fear is that it could ger worse. The complex is on the bottom end of the spectrum and one way it gets residents is by offering "all bills paid" (no credit check on the utilities).
I think it would be unwise to kill the all bills paid but I'm thinking of adding a new twist to it. I'm thinking of advertising an "All Bills Paid Variable Lease" or "All Bills Paid Green Lease". Here is how it would work. Assume a resident was paying $800 a month as the landlord was paying $200 in electric and water. The new lease would say your rent $600 (base rent) + $200 (variable rent). The variable rent is what can go up or down each month. So the first month the resident will pay $800. During the 1st month the water and electric was $190. Since the utilities was $190, the next month the resident would pay $790 (600 base rent + $190 variable rent).
My questions area:
- Is this a common practice, can someone point me in the direction of lease that would accomplish it.
- Any drawbacks to this?
- Any suggestions?
Thanks for any advice in advance!
