Who pays water/sewer/garbage?

Question

So I notice a lot of multifamily landlords I talk to seem to be paying for water/sewer/garbage. Is this normal?

For example, a house is split into an upper and lower unit, each 2/1. The current landlord pays ~$190 a month for the combined WSG fee. They are separately metered. I'd like to pass these on to the tenant. Is that unreasonable?

Thanks BPeeps

Kim Meredith Hampton · Answer

Kavin,

You can absolutely pass this one to the tenant, especially if it is sub metered, they will get in their own names upon move in.

The main reason you see landlords paying the wsg, is because there is typically only one meter

Kavin Kuykendall · Answer

It sounds like I need to familiarize myself with local "usuals" and laws. Thank you all for the detailed responses.

Patrick M. · Answer

I pay water sewer and heat in my 4 and 5 unit multi-families. That is the practice in my area. They are built into the rent. My quarterly water/sewer bill is just south of $1200 on the 5 family, heat this month $250.

It was built into the rent when I took over and after I implemented conservation/ regulated thermostats and insulation my profit jumped (one heat bill was almost $800, prior to sale).

You are set up with separate meters- If you chose to split the bill I would consider whether you can institute cost saving measures first that may give you a profit. Also understand that you will be introducing more risk into your business. If it works for you do it.

________

I choose not to go through the nightmare of RUBS because it: 1. is more profitable for me not to, 2. it would be a nightmare trying to collect an extra $2-300 a month from 5 tenants, 3. I would have to drop my rents significantly to compete, and 4. and most importantly- I am profiting as opposed to just paying the bill.

Some "smart guys" have moved in and upon rehab have instituted sub-metered electric heat, some because they have no gas and some out of a belief that they will make out better. One just had to get an eviction certified to the electric company so that they would drop the $500 bill attached to the meter- lost a month of power. Their apartments are up for  months.

Frank Chin · Answer

It all depends on the area where you are. Here in NYC where I am, the usual practice is for landlords to cover for water, heat, so it would make it more difficult for me to fill vacancies if I'm the only one charging for utilities. I don't pay extra for garbage, it's a municipal service.

I have a SFR that I have the tenant pay for water and utilities. Some years back, when I first bought the property, I was unaware that the water was a municipal utility, and when the tenant left without paying, I was unaware, they combined the bill, late charges and penalties to my tax bill. Since then, I pay the bill, then forward a copy to the tenant and then pay me. Recently, it's got to be such a pain, for the next tenant, I'll pay it, and include it in the rent.

Also, in NYC, the gas bill includes a fixed charge for getting gas to the house. it runs about $17.00 month. If a triplex has three meters, each person would pay the $17.00 plus gas usage, and if just cooking gas, a typical tenant monthly usage is $15.00, so each tenant pays $32.00. If it's all on one meter, it's $17.00 plus 3x$15.00, comes out much cheaper.

There's some new triplexes just built a block from us, my wife took a look, and realized it would had trouble selling, as it sat on the market for six months now. Not good in a hot seller market. While most area older triplexes have one furnace, one hot water tank, this triplex and three furnaces and three hot water tanks. It's built so tenant pays the utilities. Older triplexes with without the multiple heating and hot water had more rentable space on the first floor where they have a small 1BR apt. compared to a sizable 2BR or a 1BR with a built in garage, with garages that rent about $150/month. My gas bills for a 3-plex, including heat and hot water averages $125.00/month (over $400/month in the winter) for the building which I cover. So with the configuration, you already lost $200 - $300 in rent a month, due mainly to the oversized furnace room. I owned triplexes over the years, and hot water tanks are replaced every 7 years on the average, and here, I have to replace 3 of them every 7 years besides the lost rent. So building it to enable landlords to charge separately, at least in my area, is simply inefficient.

Kevin Sobilo · Answer

@Kavin Kuykendall, metering of utilities as mentioned above is certainly one issue relevant to this question. However, there is another more pertinent one.

Is the utility bill lien-able against your property? This will vary from area to area for different utilities. Usually this has to do with whether the utility is provided by a government entity. In my area sewer is lien-able unless you have a septic system of course.

Garbage is SOMETIMES lien-able in my area. In some municipalities they charge a flat fee per year, if it isn't paid a lien can be filed. Some municipalities include it with the taxes. Some others sell special bags or stickers to put on bags. Still others require the occupant to hire a private garbage hauler.

If a utility is lien-able, it makes more sense for a landlord to pay the bill directly rather than trust or have to verify that the tenant is paying it. If the bill goes unpaid it attaches to the property and doesn't follow the tenant. So, that is why in many cases landlords pay some utilities.

As a side note, I have seen many utilities provided by government entities. So, this happens a lot and varies from area to area a lot. I have seen water, sewer, electricity, and garbage all provided by government entities. I have not seen natural gas.

Justin Larese · Answer

Some Landlords find it easier to pay for these utilities. If tenants in your area are used to the provision it may be their preference. You can increase rent to off set difference. An example I owned a rental out of state, tenant fell behind on lease and I had them leave. I was planning to sell property and went to get utilities switched to my name and found the tenant had utilities shut off for gas and water due to not paying. I also had to pay the fee to have water turned back on. Unit had gas for furnace and was middle of winter so I was trying to get the house heat on to prevent pipes from freezing. Tenant was using an electric space heater. Had a rough time bc you need to let the gas company in house to inspect for gas leaks after turned on. Also had to fight city utility over me being responsible for tenant's water bill. You can stream line between tenants if these utilities stay in your name, and you can keep an eye on usage. many utilities require a deposit so tenants may be discouraged having so many deposits to pay up front. Just personal experience.

Nathan Gesner · Answer

It's absolutely reasonable. They are metered separately so make the tenants responsible for their own bills.

Who pays water/sewer/garbage?

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