Massachusetts - charging tenants for water and sewer

[Sharad Vadher]

I closed a single family home today in Massachusetts close to students living community. Thinking to renting to students with tenants paying utilities including water and sewer. Is anyone doing that? Looking forward for opinions with Do's and Don'ts. Thanks.

[Nathan Gesner]

@Sharad Vadher it's not unusual but think through the process. First, the utility companies usually require a credit check and a down payment or deposit. If your tenants are younger, they may not have a credit score yet and coming up with the deposit can be difficult. Second, the utility would be in one person's name, which means the other tenants may feel no obligation to care about utilities. Third, the tenant with the utility account could move and then there's the hassle of getting another tenant to establish a new account, getting everyone to pay the previous tenant for the final bill, etc.

It can be done, but it can also be a big hassle and cause for discord among the tenants. It may be easier to keep the utility in your name, increase the rent high enough to cover the charges, and include it in the rent. For example:

Rent is $2,000

Average utility is $200 a month. Increase by 10% for excess use. For a student-housing situation, I would add 10% for each individual so the base charge is $200 then another $20 per student. With four students, you would receive $280 towards utilities.

Charge tenants $2,280.00 with utilities included.

I also recommend setting a ceiling or cap for utility use. For example, "Rent includes electricity, water, sewer, trash, and natural gas up to $280 a month. Any use above $280 shall be billed to Tenant(s)." Monitor the bill each month and if they break the cap, pass that charge on to them so you don't get stuck with a $200 water bill.