There are several considerations.
1. Is this the general practice in the area. If rentals in the area includes utilities and your's is the only one that doesn't, it would make yours harder to rent.
2. Depends on whether the utility is on a separate meter. If not, if by percentage, you can have a paranoid tenant watching everything you do and drive you crazy. I know this, I work with one guy that watches how many home cooked meals his landlord makes, how many visitors he has which he prepare meals for. Then he counts how many takeout meals he eats. He concludes the landlord uses 90% of the cooking gas at yet charges him 50%. The cooking gas was only $30.00 a month for the whole house. He complains to the landlord every month and to me a couple of times a week. So I ask him, if your landlord charges $770 a month for rent, instead of $750 and gas, would he go for the $770. He said he would if that's the way it's rented.
3. This is not to mention allocating the bills, going after the tenants is a total PITA. I got a SFR that tenant pays for water. Originally, had the water bill put in the tenants name and they pay direct. Didn't realize they never paid it, paid them the deposit back on move out. Then I found out months later the municipal utility transfers unpaid water bills to your tax bill with fines and penalties. Now I get the bill, pay it, scan an email a copy to the tenant. Problem is the current tenant is constantly paying late on the rent, and I have to chase him separately for the water, and usually, the excuse is I can't find it, give me another copy.
All in all, my rentals in NYC includes all utilities and all built into the rent, much simpler. Outside of NYC, it's not, so I see both sides.
@Frank Chin , I appreciate the reply. My thoughts were exactly the same regarding chasing down tenants regarding the extra money for utilities. I am sure there are tenants out there who will hawk down each use of utilities and make a fuss, but that is not the worst problem to have. In my market utilities are rarely included, so my thought was if I am going to have the utility bills in my name anyway (house hack), then why not become more marketable of a unit because of this and cut out the chase for the extra payment each month.
I find I can offer more competitive rents by charging separate for the utilities. They come in, see how nice the house is and want it.
Though I always do provide utility estimates from prior years/tenants. I don’t want anyone to be surprised - and they of course still calculate it all in. But the fact that the rent is $100-200 cheaper at least gets them in the door.
BUT - check out what your competition does!
@Mike McCarthy , thanks for the input. I have had the property listed for about a week now, and I have generated decent interest with utilities included. If needed, I might switch to listing at a $100-$200 lower price without the utilities to get more foot traffic. For the future, I will probably start without the utilities. Makes estimating income trickier, although having the utilities included is a nice incentive to go with signing the one year lease.
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