Updated over 7 years ago on . Most recent reply
How to proceed with non-separate utilities
Can anyone help me with this dilemma? So I have two units, that the electricity for both is under one meter. How do I proceed to rent out these units? If I pass the electricity costs to the tenants, then I leave the burden to them to discuss and negotiate how much each tenant used that specific month. I know that If I was in this situation I would not want that responsibility, because there is room for one or the other to take advantage of the situation. On the other hand, if I as the landlord take the responsibility to offer a flat rent with utilities included. I am in a vulnerable position with the tenants using the electricity without the fear of the consequences of high energy consumption. Has anyone else had this issue, and how did you mitigate the situation?
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- Real Estate Broker
- Cody, WY
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Do not put tenants in charge of utilities. That's a recipe for disaster when Tenant A complains Tenant B uses more or that Tenant B hasn't paid their share for the month.
Contact the utility company and ask them for an average use for the past year. They will typically give you a high month, low month, and an average. If the average is $200, add 10% then split it equally among the tenants ($200 + 10% = $220, each tenant pays $110). Some months you won't collect enough to cover the bill but other months you should collect extra. After 6 - 12 months, compare what you've collected with what you had to pay and then increase/decrease accordingly.
Put this in writing. Also put in writing that you will evaluate actual use vs. funds collected and adjust their bill up or down based on actual use.
- Nathan Gesner
