Investor · Tinton Falls, NJ · Member since 2018 · 61 posts · 37 votes
Hi All — I’m an out-of-state investor and own a 12-unit MF in the Cleveland area. My building is not separately metered for water/sewer, so I pay those expenses. Does anyone know how common that is (for the owner to have to pay instead of the tenants)? Also, any opinions re: should I add an extra water/sewer fee to cover this cost or simply increase the rent? Btw - it’s cost prohibitive for me to separate the plumbing , so that’s not an option. Thanks! - Karl
There are specific municipalities in the Cleveland area that prohibit a water and sewer fee because they are not individually metered. You should check on your specific location to make sure you even have the option.
I’ve had people advise me to add a water/sewer fee, but my PM says “people aren’t stupid, just raise the rent to cover the cost.”
In my experience over all on most MF buildings that have been around a while the water and sewer are paid by the landlord. Some newer builds are changing this to separate meters paid by each unit. I think raising the rent, potentially a little more then you would normally to cover it would be best. I agree that suddenly changing the direct payment of them from you to them could cause hard feelings more then a rent increase will.
There are specific municipalities in the Cleveland area that prohibit a water and sewer fee because they are not individually metered. You should check on your specific location to make sure you even have the option.
Its much easier to simply raise the rent slightly to cover the expenses rather then billing your tenants separately for water and sewer. Also I think tenants feel like they’re getting a great deal when they see utilities are included in the rent each month.
This is normal in the Cleveland market, very few muti-families are separately metered. I think the PM is correct, adjust your rent accordingly. Generally, under Ohio law and specifically in local court interpretations, you must have a separate meter to bill the utility to the resident. I do know that some landlords use the fixed charge amount concept for the water/sewer but it is unclear in case law how well that holds up because there is no meter reading to justify the charge. Why take the chance, just add to the rent.
We have a 4 unit building and we started out splitting the cost between all the units. It's a lot of work to keep up with. Now we raised the rents to cover the water/sewer. We calculated $600 every 3 months, that splits out to $50 a unit per month. On average, our water/sewer bill runs between $500 & $580 a quarter and we state in our lease that anything over our budgeted amount will be split between all the tenants. This helps keep the tenants mindful of the amount of water they use.
Tenants do like to feel that they are getting a good deal and stating that w/s is included, they like it.
I have a rental in Ytown that I have to pay the water on. So I upped their rent by 100.00 over what I would pay (x 2 bc duplex) and then told them that I would pay the first 125.00/mo of water and trash, and they needed to pay their share of any overages monthly (based on number of ppl in their unit - so if they have 3 ppl annd the other unit has 2 ppl, they would pay 3/5 of any overage)
I hope making them somewhat responsible makes them more careful with water usage.
I bill mine separately. As Las Vegas insists the sewer stay in the owner’s name. That means when people see the listing my rent is lower than the people who included it in the rent and I end up with the tenant even if our real rents were the same. As someone said. The tenants aren’t stupid and hey know water, electricity, cable and other utilities aren’t included. I attach a copy of the sewer incovie so they know it’s real and I’m not making a profit on it.
Things are different in different parts of the country, but I make my tenants responsible for all utilities (water, garbage, sewer, gas and electric). I ask a lower price for rent than others do because of it. It’s kind of like 6 of one and half a dozen of the other. Some people are happy to see the lower rent fee and don’t think too much into the cost of water/sewer/garbage. The city recommends the owner put it in their name because they are ultimately responsible for the bill, but I get a copy of the monthly bill which shows me if the tenant has been paying.
This is normal in the Cleveland market, very few muti-families are separately metered. I think the PM is correct, adjust your rent accordingly. Generally, under Ohio law and specifically in local court interpretations, you must have a separate meter to bill the utility to the resident. I do know that some landlords use the fixed charge amount concept for the water/sewer but it is unclear in case law how well that holds up because there is no meter reading to justify the charge. Why take the chance, just add to the rent.
Cleveland proper has a local ordinance that specifically prevents charging tenants for actual utility usage unless the unit is submetered for that utility and the tenant has access to the meter. Nothing stopping you from adding an extra $50/month flat fee (or whatever) at the time of leasing to cover costs. But you won't legally be able to go back to the tenant and charge extra if usage is high or there's an undetected / unreported water leak that skyrockets your bill. I'm not sure if any suburbs have and enforce this rule, but there's definitely a local City of Cleveland ordinance that prevents this. It's not in the statewide Ohio Landlord Tenant statute.
@Timothy Murphy III Section 5321.14 / Unconscionable terms. Is the very general concept of the state law that seems to be used by local courts to say that the water needs to be separately metered to be charged. Other than Cleveland with their unique law, other courts seem to use this to apply the same reasoning in other communities. It is, I think, intentionally vague.
I have a rental in Ytown that I have to pay the water on. So I upped their rent by 100.00 over what I would pay (x 2 bc duplex) and then told them that I would pay the first 125.00/mo of water and trash, and they needed to pay their share of any overages monthly (based on number of ppl in their unit - so if they have 3 ppl annd the other unit has 2 ppl, they would pay 3/5 of any overage)
I hope making them somewhat responsible makes them more careful with water usage.
This may not be legal... you should check on the regulations. Sub metering is actually not that expensive.
Local laws on including in the rent may vary, but IF you are paying, regardless of how you address this with tenant rents, you need to perform annual testing to ensure there are no unreported leaks such as running toilets or dripping faucets that are literally throwing your money down the drain.
This can be common where buildings are older. You need to check comps in terms of bill back. If all your competitors are providing utilities you should as well. If they're billing back then you can as well