How do you handle utilities for 2 Properties on 1 Lot

[Takeo Kingi]

Hey guys,

I'm currently looking to put an offer in on a multi-family. The way it's laid out is a SFH(2+1)plus a studio on one lot. As of now I believe all utilities are on one set of meters. So based on that scenario I'm curious as to how some of you approach handling utilities.

I know there’s different options my goal is to avoid paying them myself (curious if anyone’s got creative) but regardless id like to hear what input you guys have.

Thanks in advance, this will be my second rental (potentially) but my first multi family.

[Josh Will]

Clarifying the  "Paying them myself" is important.

If you choose RUBBs, the utilities will be in your name and you will collect a portion from your tenants based on either the size of unit or number of bedrooms. You will want to do some research or bring in a professional if you take this road as percentages vary by utility and maybe by state.  I am speaking from my experience as an investor in Texas.  

You could increase rent and rent as "all bills included".  Again, utilities will be in your name.  With this option, you need to take head of how renters are behaving.  Heater on in the winter with windows open...are they washing their vehicles at the property, filling up baby pools each day?  

Re-meter/Add meters- This could get expensive depending on your set up, but would give you the ability to take the utilities out of your name. It may also allow you the option at a future time to sell properties as condos (again, this is just a thought as I don't know your specific situation).  If you go this route, do your homework.  Want to make sure the juice is worth the squeeze.