Who pays for utilities?

Question

Hello BP,

In starting to analyze potential deals, I've run into my first big question. In Minneapolis or Minnesota, who pays the utilities? Does it vary based on SF, duplex or apartments? If it's the landlord's responsibility, what are the average costs? Any advice from Minnesota landlords is appreciated! Thank you!

Bruce Runn · Answer

@Franchesca Ramaker

I own duplex and triplexes in Minneapolis.  The water/sewer/trash has to be in the owner's name.  In all my properties, tenants pay for heat and electricity unless there is a common laundry, then I have to have those utilities in my name due to shared metering statutes in Minnesota.  Glad to walk you through those if you aren't familiar with them.  glad to share costs ect, just connect with me as it's not a 1-2 sentence answer.

Account Closed · Answer

What Bruce said :)

Bruce Runn · Answer

Thomas S.

I disagree with Greg.  I own several properties where there is one boiler/furnace or possibly 1 electric meter.  The bill is in my name and the expenses are charged out to the tenants based on sq footage of their unit so they are very in tuned to keeping their heat/electricity costs down.

What I would say relative to Greg's comment is, I wouldn't buy a property if I couldn't allocate those expenses like an apartment building because based on friends experiences, the costs are double if a tenant isn't paying the bill because they generally don't care.

John Woodrich · Answer

Oh - it wasn't your question but in my experience most utility companies like to have you on the account as the landlord however they will bill tenants directly.  They like to have you on file to facilitate the utilities back into your name when a tenant moves out.

John Woodrich · Answer

I believe it is public information if you called the utility company and asked them how much gas/heat/electric were for the year.  If not you can always ask the seller for that information in completing your due diligence.

The real answer to your question is that it depends on the circumstances who pays.  Each area has a different demand and the higher the demand the more people are willing to pay for that area.  If all the other duplexes are renting at $1,200 + Utilities (say $300) the expected expense for a similar unit will be the same $1,500.  If the numbers are accurate, no renter is going to pay more than $1,500 for this unit whether you pay the utilities or they do.

In completing your research on rent prices in an areas you have to consider units that the tenant pays utilities and the landlord pays.  Above is a prime example of how this is treated differently across the board.  Focus on total cost of living in an area and you should be fine.

Bruce Runn · Answer

It's rare to see separate meters and I just don't think it's worth the effort/possibility of problems and that one isn't abused.   Ultimately, it has to be in your name because it's assigned to the property and if a tenant doesn't pay, you are still responsible- the same is not true for electric and gas.

Adi Zhuravel · Answer

Bruce, the water/sewer/trash has to be an owners expense in Minneapolis? What if you have separate water meters?

Deanna McCormick · Answer

Have you tried to contact Xcel or Center Point,, They have landlord forms you fill out on line for your tenants,, the service cost is put in tenants name but your also on record for emergencies and notified if a shut off is going to happen.. For water I'm not sure call your city..

Also if it's more than  a 1 unit building it would need to have separate meters for ease of billing for gas & elec.  or you'd have to figure out a shared portion or go utilities included with rent.

Water is always tricky rarely seperate meters and they tack on recycling fees, sometimes you can arrange for private trash if it's included but usually it has to be a large building for that.

David Dachtera · Answer

@Franchesca Ramaker,

It's not locality specific, though you'll need to research the landlord / tenant laws and building codes in your area.

In general, if the units are "sub-metered" - each unit has its own water, gas and/or electric meter, then each tenant pays their own and there should be a common area meter in some cases for stairway lights, outdoor lights, lobby / vestibule heat, common laundry, etc.

Where I'm living now, I pay my own gas and electric, and water / sewer / refuse are included in the rent.

Who pays for utilities?

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