Passing utility & landscaping costs to tenants

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Passing utility & landscaping costs to tenants

Michael Pike
Rental Property Investor · Dallas, TX · Member since 2018 · 12 posts · 6 votes

Hello Everybody!

I'm a new investor and one of the properties that I am looking at is a tri-plex. The current owner pays for the water and lawn care. My question is: can those costs be passed on to the tenants and if so should they be billed separately or should the rents be raised to cover to costs?

Thank you in advanced.

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Ray Harrell
Investor · Chicago, IL · Member since 2016 · 1k+ posts · 930 votes
8y

Are you saying the cost of water and lawn care is the difference between you purchasing the property or not? Doesn't sound like there are high enough margins in the first place.

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  • Blair Poelman
    Real Estate Broker · Provo, UT · Member since 2013 · 689 posts · 511 votes
    8y

    the terms of the leases in place will dictate what you can and can't do.

    Chances are there is only 1 water meter, and splitting it 3 ways is usually the beginning of tenant-tenant conflicts.

    You could probably give somebody a rent credit to take care of the lawn, but if the lawn is generally used as a common area for all tenants, the landlord usually covers that cost.

    You could always change lease terms when the leases expire - but as a rule, the leases stay with the tenants who are in the property even when a property is sold.

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  • Dick Stevens
    Rental Property Investor · Haverhill, MA · Member since 2017 · 290 posts · 185 votes
    8y

    It’s usually not cost effective to submeter the water and some states, like Mass, have strict regulations for charging water to tenants.  Best to just make sure rents are high enough to cover your cost.  In a multi, Landlord takes care of exterior maintenance.

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  • Dennis M.
    Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    8y
    @Lozell Mitchell I do my own lawn care . The old landlord at my trIplex had one of the tenants do it for a reduced price but the yard was unkept the hedges were never trimmed and grass was knee high . As soon as I took possession I changed that real quick and did it myself so I got full rent .
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  • Michael Pike
    OP
    Rental Property Investor · Dallas, TX · Member since 2018 · 12 posts · 6 votes
    8y

    Thanks for the quick replies. I wasn't sure how it works but this info really helps my decision about purchasing this property.

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    8y

    You can easily add the cost to the monthly rent but only if the market supports that. If a typical 2bed/1bath unit goes for $700 in your market, it may be hard to rent yours at $750 to defray the costs of mowing.

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  • Michael Gansberg
    Investor · New York City, NY · Member since 2015 · 388 posts · 563 votes
    8y

    Hi @Michael Pike - I agree with the above posters, just factor it into the monthly rental amount. To increase profitability, you do have options- just reduce the water usage by 30% or so. It's not hard- install aerators in sinks which don't have them(and install Water Sense faucets when replacing faucets, they'll use about 15% less water than regular faucets.)

    Then use low-flow shower heads(go for 1.75 gpm, anything lower will cause unhappy residents.) And the Niagara Stealth toilet uses only .8 gallons per flush, about half of the average toilet. These modifications will reduce water usage quite sharply. 

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  • Ray Harrell
    Investor · Chicago, IL · Member since 2016 · 1k+ posts · 930 votes
    8y

    Are you saying the cost of water and lawn care is the difference between you purchasing the property or not? Doesn't sound like there are high enough margins in the first place.

    1Reply
  • Jim Robertson
    Investor · Austin, TX · Member since 2014 · 102 posts · 41 votes
    7y

    What is the cost of lawn care? I have a 4 plex with a relatively small yard and am paying $1240 annually (which I think is too high). It's just under $50 per visit, with a visit about every 2 weeks. More visits in summer and less in winter. 

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