My husband and I purchased a multi-family unit a little over a year ago which we live in on the 2nd and 3rd floor and we rent out the 1st floor. Our first tenant was already living in the 1st floor apartment when we bought the house.
Our first tenant moved out to move to another city and we have new (young 23-24 yrs old) tenants who moved in a few weeks ago and I'm already concerned about quite a few things we've experienced (telling us they had 1 cat when they have 2 and finding this out after they filled out the lease paperwork, dog waste in the yard, animal smell in the front hallway, never ending laundry in the free laundry facility in the basement). I am giving a little extra background info here to help with the full picture of my question...
All utilities with the unit are included (everything runs on the same meter and we have no way to separate the charges to calculate usage). We provide a window AC unit for the summer months as we're in Pittsburgh and it gets really hot and muggy. We are installing the window unit this evening and with all of the other fairly minor complaints I mentioned above, I am looking for advice on asking them kindly to monitor their usage.with the AC Unit.
It is a standard electric window unit so putting a lock on it to keep in above a certain temperature is not and option, and we cannot separate the electric bill since we've already listed utilities as included in the lease and all of the electric runs on the same meter.
I was thinking of asking if they could please be considerate of their usage for consideration of energy costs and if they aren't in the apartment for extended periods of time that they either keep the temperature at a higher degree or even shut the unit off. My husband suggested we just install the unit and see how its goes for the first week, saving any hassle if they are responsible about the usage. I'm concerned, one, if we let it go for a few weeks and they aren't responsible then the electric bill will be through the roof, and two that it will be more difficult to ask them to cut back on the usage after we already let it go.
Any suggestions anyone could provide are really appreciated!
I would be very wary about asking her that in the beginning. On the other hand you have very right to ask to speak to her about the other issues. I have found that people push the limits until you say no. Actually I highly recommend it. I would in the future mention a limit on the bill that you cap.
Congratulation on becoming property managers. Although It can be stressful but very rewarding. I even started a website talking alll about self management.
Biggerpockets is a great resource. Post an introduction in the starting out so people can help connect.
I agree with Elizabeth that people push the limits.
You could write up a set of rules for them to agree to since they have different living standards. It's not fun but the alternative is allowing them to bring down the value of your home.
Congrats on your multifamily and good luck with these and future tenants.
If you're concerned about their electric usage, and you should be, then you need to do some sort of submetering. Ideally, get a separate meter and separate account with your electricity supplier. If not, some sort of third party submetering system that measures electricity separately. Asking the tenant to control their usage is just not going to work, unless you get lucky and have a cooperative tenant. What you write suggests that is not the case.
You're probably going to have to write this off as a lesson from the school of hard knocks. You've already committed to this tenant that electricity is included. Since you're providing and installing the AC I assume you've committed to that, too. Even if you didn't agree to provide the AC unit you would be stuck paying whatever bill the tenant runs up.
For the future, look into separating the electricity for this unit into a separte account or installing some sort of metering system. Investigate "RUBS" (ratio utility billing system).
I agree with Jon- you're stuck with them until lease renewal or if you can find a way to evict. It's not easy to evict for trivial items such as pet waste normally though. This is why I prefer (and I think John also but I could be wrong) month to month leases only. If I don't like a certain behavior, they get a 30 day notice. Attitudes change when they realize the landlord has the authority to do that, and I believe the month to month is powerful. :)
I too have found that asking tenants to watch usage, even after informing them that their bills were unusually high, does not work.
My lease contains the following clause to cover landlord-provided utilities, but to be helpful you would need some type of meter.
Agent/Landlord reserves the right to surcharge the tenant any utility costs that escalate more than 25% during the term of this agreement due to events beyond our control. The increase in costs will be shared over the 25%
It might be less expensive than you think to separate out the electric- never know until you get a couple quotes.
Here is what I did:
I own a duplex that only has one meter and one furnace for both units. Because of this I include the cost of utilities in the rent. A few years ago I got new tenants in the upstairs unit and my utility bills suddenly got really expensive. After a few months of doing nothing but feel resentful, I approached them about the situation and offered them two options.
Option A) I would do a month by month comparison of their power bills to the bills from the previous year. If the usage was lower than it had been that month in the previous year I would credit them the difference, but if it was higher I would charge them the extra.
Option B) I would do the same comparison except that we would split any savings equally and I wouldn't charge them for overages.
I guess they were nervous about overages because they chose option B. As it turns out they've gotten a rent reduction every month since we started the system. Every month I take a few minutes to do the calculations and then send an email saying how much we've both saved. I think this incentivizes them to save even further since the bill has been reduced by as much as $90.
Maybe you could try something similar.
@Bryan A. yep, I only do month to month.
@Rick C. I do have one unit where I pay the water and trash, due to problems with these bills in the past. I know what the typical charges are, so I include a clause in the lease that has the tenant pay me. I charge them a flat $100/month while the actual bill for trash is about $30 and water is typically $75-80. And I have a clause that states if the water bill exceeds $100 they will be billed for the excess.
Providing an AC unit (for which you will need to be responsible for repair) is generous. I hope you include in the lease that it is the only AC unit they can have. If you don't say it is the only one they can have then I might say that now. I have tenants in one bedroom apartments with two big ACs but they pay electric. For electric you can insist on closed windows when AC is on. You can also make requests but don't expect they will necessarily follow them so I wouldn't get too detailed. I don't know if you can put a timer on the AC electric outlet if they have a regular work schedule (I don't know if you can use these with AC). I would request they shut off AC if off it they go away but they may not listen. There is not a lot more you can do LED bulbs and other energy savers only go so far. Your biggest electric drain will also be your AC and water heater which you might look into options for. On the laundry and other points I would start early reminding them that laundry is for their personal use only and if you are sharing washing facilities you may need to set some rules around that.
Also I know people say split the electric and even though you can't do that now you might consider getting an estimate of the cost and time to payoff in the future.
Living with a tenant you need to watch out that the little things don't get to pile up so you just blow up one day. Address them early, professionally and firmly. Know your lease and tenant law. Good luck
How long is the lease for? Did you mention providing a window AC unit in the contract?
If not, perhaps while installing it let them know you are doing so as a courtesy and please be considerate of the energy cost.
Submeter the utilities as soon as possible and review the usage history with the utility company. Charge a flat rate based off the usage history for any combined utilities so you don't lose your shirt. The cost to separate the utilities is well worth it. Not only will it save you money but it will stop being a mentally taxing situation you keep worrying about.
In my personal experience, as long as it's new, window A/C units are very reasonable to operate. I bet your bill won't be that bad.
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