Section 8 and high utility bills - Should I make them pay overages?

I pay w/s/g in this economy and I am on the forth month now with two newer sets of section 8 tenants really high on their w/s/g bills. They are each running $45 over a month. Should I make them pay the difference to enforce it?

The overage is due to them always having extra guests over and them not working being home all day.

I put a lease addendum in that they pay overages but I do not want to piss them off and have them move since there are now some other cheaper rentals in the area. So for they are good tenants and mind their own. (besides getting that pit bull with out asking)

Joshua Dorkin

BiggerPockets Founder · Denver, Colorado

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Nov 04 '10, 04:16 AM

Justin - Why are you paying utilities instead of making the tenants? Putting utilities in your own name can be a very costly proposition.

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Michael S.

Residential Real Estate Agent · Camden, New Jersey

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Nov 04 '10, 05:46 AM

for them it is a bonus! that might be why they moved there in the first place.

Justin Case

Real Estate Investor · Seattle, Washington

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Nov 04 '10, 10:26 AM

It is a duplex so utility bill has to be in my name. Also section 8 requires owner pays.

Cj L.

Rehabber · Denver, Colorado

79 posts
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Nov 04 '10, 10:49 AM

That is terrible section 8 requires you to pay but since they do I would at LEAST make them pay the overages unless you really don't want to lose them as tenants and feel that you can;t replace them.

Michael S.

Residential Real Estate Agent · Camden, New Jersey

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Nov 04 '10, 01:15 PM

Originally posted by Jet_Speed:
It is a duplex so utility bill has to be in my name. Also section 8 requires owner pays.

my section 8 people pay their own gas/electric in nj

John Chan

Real Estate Investor · Cincinnati, Ohio

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Nov 04 '10, 01:27 PM

I didn't know Section 8 could make you pay for utilities. I always make my tenants pay for all utilities. Only if I absolutely cannot rent out a unit will I go Sec 8.

Jon Holdman

Real Estate Investor · Wheat Ridge, Colorado

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Nov 04 '10, 03:29 PM

Originally posted by Jet_Speed:
It is a duplex so utility bill has to be in my name. Also section 8 requires owner pays.

You should double check on that "section 8 requires owner pays". That does not appear to be the case in the Seattle Housing Authority web page. They have a worksheet there for figuring out a utility allowance based on what's included with the rent and what's not. Their voucher amount includes both rent and utilities. If this is all included in the rent, then you would get the full voucher amount. If they pay the utilities, the amount they can pay for the rent is reduced by the amount in their spreadsheet (pdf file). So, the rent you can get is higher if you include the utilities, but then you take the risk the tenants spend more than you've accounted for.

Call the section 8 people and talk to them.

Sounds like you have a duplex with only one set of meters. That doesn't keep you from charging the utilities back to the tenants. Probably can't change it at this point, though.

Edited: 11/04/2010 at 11:23PM by Jon Holdman

Jon Holdman, Flying Phoenix LLC

Cj L.

Rehabber · Denver, Colorado

79 posts
5 awards

Nov 04 '10, 03:43 PM

Yeah I would agree with Jon at this point even if you find out that you don't have to pay the utilities you really can't go back and try to change whatever agreement you had with them. Just let it be lesson learned. (and good research Jon you know what you're doing.)

Justin Case

Real Estate Investor · Seattle, Washington

176 posts
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Nov 11 '10, 06:01 AM

I only have one meter on the duplex.
I found out that both sides are doing laundry constantly and pretty much run day cares for their older kids since they do not work.

I wrote addendum in the lease that I only cover utilities to the Housing Authority amount. Giving them the notice to pay the overage pisses them off and they try to get the housing authority on their side.

Jon Holdman

Real Estate Investor · Wheat Ridge, Colorado

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Nov 11 '10, 06:06 AM

I really do not think you can unilaterally modify the lease to make them pay this. If your lease says you're covering the bills, you have to pay.

Speak with the housing authority people and see if you really have to pay the bills or if the tenant can be made responsible. Again, don't think you can change now, but you need this information for later.

Then, when the leases come up for renewal, reduce your rent by the housing authority utility amount and make the tenants responsible for them.

Caulk this up to a learning experience.

Jon Holdman, Flying Phoenix LLC

Aly L

Real Estate Investor · Middletown, New Jersey

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Nov 11 '10, 08:10 AM

My S8 tenants pay the water/sewer here in NJ. And here in NJ, if they don't pay the bill when they move out, the owner has to. Out of their security deposit though :) I keep tabs with the water company to see if they're behind and by how much, especially now that I have a tenant whose lease is about to expire.

Justin Case

Real Estate Investor · Seattle, Washington

176 posts
1 award

Nov 11 '10, 09:25 AM

Jon,

I have an addendum signed that says I pay only up to the Housing Authority amount. They are over this amount and I can pass the overage to them.

Either way the bill still has to be in my name by law since it is a duplex.

Steve Babiak

Real Estate Investor · Audubon, Pennsylvania

6,862 posts
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Nov 11 '10, 09:31 AM

Originally posted by Jon Holdman:
....

Caulk this up to a learning experience.

Somebody's working on his properties too much, when "caulk" replaces "chalk" :lol:

Scott R.

Real Estate Investor · Amarillo, Texas

450 posts
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Nov 11 '10, 03:32 PM

What do you mean up to the housing authority amount!? And if your properties are higher priced then others in the area, I think I'd eat the cost, no sure what exactly the cost were discussing is, but you make it sound like you'd have to lower your rent to get a new tenant.. A local new investor I was talking to here was looking at getting a new tenant for one of there properties because the current tenant didn't want to sign a new lease unless the price stayed the same. They were consitering looking for a new tenant over $30 a month, doesn't make sense IMO as the minimum one month they'd probablly have the unit empty would eat away all of that profit for the next year, and that's if the house needed no make ready..

Matthew Swarner

Real Estate Investor · Coatesville, Pennsylvania

3 posts

Nov 11 '10, 09:46 PM

You might want to check out The Section 8 Bible volumes 1 & 2. They sell on Amazon. You can read "look inside" the books online and read part of each book online.
These guys built a Section 8 empire in Philadelphia and have encountered the very same problems you described and offer solutions. Very funny books too. Great stories. You can order both books plus their "bullet proof lease" for less than $90 I believe. If you use their lease you should have a local attorney look it over. But, they claim they have never lost a court case while using this lease.
Their website is section8bible.com
I hope this helps. And no, I don't know the authors and don't get paid if you buy their materials.