Including vs. splitting utilities in small multifamiles

5 Replies

Up until yesterday I've always thought it was ideal to split as many utilities as possible, always.  My thought was this, if a faucet is dripping (or worse) I want them to think "I'm paying for that water" and either fix it them themselves or call for a repair.  I'm concerned tenants just won't give two cents if utilities are included.....let drips happen, turn the thermostat up to 80, etc.  I'm also concerned the closer to C the neighborhood is, the more this "utility abuse" will occur.

I just discussed this with @Ryan Murdock .  He prefers to cover utilities in multifamilies with lower quality tenants.  Most importantly they don't let heating oil run out and pipes freeze, but they also don't tend to have as much of their act together, and don't pay utilities timely and get them turned off.

Thoughts on this pro vs. con on utilities?  I've passed over many small multis because I couldn't meter out all utilities.  

I have thought about charging tenants a pro rata share when it is not possible to sub meter due to the existing piping. I usually end up coming to the conclusion it is not worth the extra work to track it and bill back the tenants each month. In theory it is simple enough but then you run into issues like move in/ move out dates not lining up with your billing cycle, tenants who complain they don't use as much water as others, notifying tenants and collecting payments etc. I just include it and keep an eye on the usage. I also have verbiage in my lease that would allow me to charge extra if it drastically increases. 

Originally posted by @Peter M. :

I have thought about charging tenants a pro rata share when it is not possible to sub meter due to the existing piping. I usually end up coming to the conclusion it is not worth the extra work to track it and bill back the tenants each month.  

If I thought this way it would cost me about $500/month on just 11 units. It IS a hassle at times, but still worth the effort.

@Chanda Wa

D. If any utilities provided by Landlord listed in Paragraph 11A increase by more than 25% of a 6 month moving average, Landlord may assess additional fees at a pro rata share per unit to cover these additional costs.