Back to: Landlord Success: Proven Strategies & Practical Advice for Stress – Free Property Management
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UTILITIES: Who will pay the utilities? This can make the difference between being cash flow positive or not. Who pays the utilities can be a function of the building type that you own. If the tenants are paying the utilities, they should have a vested interest in conserving energy.
- If possible, MAKE THE TENANTS PAY all utilities.
- If the property is a single-family home, tell the tenants during the Pre-screening and inspection that they will be responsible for paying all the utilities and they will have to set up the utilities in their name directly with the utility company.
- If the property is suited with one set of meters and more than one unit you have a couple of options:
- Have one person (upper tenants) pay the utilities and have the second tenant (lower tenant) pay the first tenant with a 50/50 or 60/ 40 split (best option).
- Have landlord pay the utilities and collect from both tenants with a 50/50 or 60/40 split. This is not as good as it is time consuming for the landlord.
- Have the utility amount included in the rent but, then adjust the billing every quarter or 6 months to make sure they are paying enough.
- If the tenant says to you during the interview process “Can you put the utilities in your name because I have had problems in the past with the utility company?” it may be an indication that they have financial problems and may not make good tenants.
- When you’re looking to purchase an investment property, it is ideal if you can have a separate set of meters for each tenant.