I'm just starting out and looking into 2-4plexes. Is there an easy way to figure out which utilities the tenant pays and the landlord pays?
2-4plexes seem to add an additional layer of complexity because in these the landlord is expected to pay for certain utilities? And also some or most properties don't have submetering....
And also it varies by location?
I'm finding it difficult to do property analysis when it varies by property, type, and location.
In your due diligence the landlord should disclose what they are paying. You can also check and see how the utilities are broken up. That being said, check you local rules. A lot of states govern how utilities can be charged. Especially if they aren't separately metered. Lastly, look around and see what your competition is doing!
Elizabeth has great advice.
Here's how we handle it--
What does the listing say? Start here, but always confirm.
Search internet rental ads for the property. Again, confirm the info.
Check # of meters- where I am water is almost always paid by the landlord for 2-4 unit properties. I have seen duplexes with 2 water meters though. Gas and electric vary widely- see what's there. if it is has multiple meters, confirm who is paying- we bought a triplex where tenants are paying electric and the landlord pays the gas bill for all 3 units. Why? One account covers the gas for the common area heating, another the hot water for the washing machine, and honestly it rents easier when the tenant is not stressed about what the winter gas bills might be!
Call the utility company. Ours will not give the billing address or names, but will confirm if the multiple meter bills are being delivered to the service address or to some other address. If they are going to another address they will confirm that they are under the same name-- likely the owner. I explain why I am asking, and have the owner's name and address from the tax records. If the owner is paying, I ask for the average bill amount.
The leases- get a copy of the leases to confirm.
You never know what you will find- our latest purchase has separate gas and electric meters for the 4 units but the landlord is paying all utilities. They have a clause in the lease stating that the tenant would be charged for anything over $175/ monthly total for gas and electric.
If you are not sure how the utilities are broken up in the house that is something a more experienced investor or a home inspector should be able to tell you.
Also, when you look at the leases it should state which utilities the tenants and landlord pay. I know on our leases there is a specific section that states that info.
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