water bill in quad paid by owner?

6 Replies

I looked at 2 quadplexes this week and both had the utilities split (i.e. gas and electric paid by the tenants) but the water bill was paid by the owner. meaning that there was only one water meter. 

  1. is this the norm?
  2. how do I go about getting the tenants to pay the water bill?    

if I can do this the deal has a higher ROI.

also, both quads had washers/dryers in the basement. how long should I wait before I convert them to coin-operated for extra revenue?

thanks in advance

1. It's probably the norm if it's an older property.

2. I would check with the county/township first to see if you're allowed to bill back water to the tenants (some wouldn't allow this even if submetered). Also get in touch with a local property manager to see what they normally experience.

3. If the quads have good, long-term tenants and the water bill isn't out of control, maybe don't convert to coin-operated right away. Run the numbers as the quads are now. Figure out what your water/sewer monthly average is since as of now that is your responsibility. And see if the properties still look like a good purchase.

You might be better off adding rent escalation clauses to your leases (once they expire) if they aren't included already.

1. You will decrease your rent when you start billing water. It may also make your units less appealing and add another layer of management. I make more money by having it included in my rent and instituting conservation And there is no hassle.

2. As for the coin-ops, you will not so much be adding revenue as off-setting expenses. If they are on month to month I would give them30 days notice. If not, upon lease renewal.

@Robert Fornwalt It multi unit dwellings in my market the norm is for the landlord to pay the water billand most of the municiaplities do not allow the water to be billed to anyone but the owner.

If you are renting a single family it is common to bill the tenants for the water usage because there is no questioning who is using the water. Again, this in most cases requires the owner to be the one who actually pays the municipality and the owner then bills the tenants separately.

It's normal. Determine average use for the property, divide it by the number of units, add 10% as a buffer, and then increase the rent by that amount.

I own a triplex, I pay the water bill and I see it as an advantage. Advertise "Water included in rent!"
Just keep an eye on the bills--sometimes the tenant may have a leak and not tell you. The rent amount should hedge for events like that. So, as Nathan said, put an additional 10-15% to what the last year's water bills averaged.

As stated, get historic bills, do the math and then figured that average per unit expense into your rental rate