How to handle utilities in a single family rental

General Landlording & Rental Properties
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How to handle utilities in a single family rental

Dzenan Catic
Realtor · Grand Rapids, MI · Member since 2019 · 19 posts · 4 votes

Hello, 

I am renting out my first property. It is a single family home. How do I go about utilities? Do you have the tenant put the water, gas, electricity, trash in their name and show you proof that they are paying them every month? or do you put the utilities in your name (or in the name of the llc) and just send the bill to the tenant to make sure it gets paid that way?


Curious if anyone ever had any troubles with tenants not paying utilities and how you went about that?

Thanks for your help!

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Kyle J.
Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
6y

I have the tenants in my SFR put all utilities in their names.  

Some landlords will put utilities that can attach to the property (i.e. water/trash/sewer) in their own name to make sure they get paid, and then just bill the tenant for the cost or factor them into the rent.  

I wouldn't personally put any metered service in my name (i.e. gas/electric), ever.  There's just no incentive for the tenant to conserve and I wouldn't want to get stuck with a high bill.  Plus, at least in my area, utility bills like that follow the tenant, not the property.  So if the tenant didn't pay them, I'd rather they followed the tenant than me or the property.

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  • Daniel Haberkost
    Rental Property Investor · Colorado Springs, CO · Member since 2018 · 682 posts · 729 votes
    6y
    Originally posted by @Dzenan Catic:

    Hello, 

    I am renting out my first property. It is a single family home. How do I go about utilities? Do you have the tenant put the water, gas, electricity, trash in their name and show you proof that they are paying them every month? or do you put the utilities in your name (or in the name of the llc) and just send the bill to the tenant to make sure it gets paid that way?


    Curious if anyone ever had any troubles with tenants not paying utilities and how you went about that?

    Thanks for your help!

    I have my tenants set up everything in their name but I have a separate "landlord account" where I'm notified and everything is immediately transferred to my name if service is stopped due to nonpayment. I would call your local utility company and see if you can have something similar set up. 

    Prior to having the landlord account, I did have issue with a tenant not paying the water bill but thankfully by the time I received a letter letting me know he had already handled it. 

    2Reply
  • Sudhanshu Singha
    Investor · Colonial Heights, VA · Member since 2015 · 78 posts · 53 votes
    6y

    @Dzenan Catic I would definitely recommend always having the tenant turn on the utilities in their name so you don't get stuck with the bill if they end up with financial problems or you end up having to evict them. 

    1Reply
  • Kyle J.
    Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    6y

    I have the tenants in my SFR put all utilities in their names.  

    Some landlords will put utilities that can attach to the property (i.e. water/trash/sewer) in their own name to make sure they get paid, and then just bill the tenant for the cost or factor them into the rent.  

    I wouldn't personally put any metered service in my name (i.e. gas/electric), ever.  There's just no incentive for the tenant to conserve and I wouldn't want to get stuck with a high bill.  Plus, at least in my area, utility bills like that follow the tenant, not the property.  So if the tenant didn't pay them, I'd rather they followed the tenant than me or the property.

    2Reply
  • Dzenan Catic
    OP
    Realtor · Grand Rapids, MI · Member since 2019 · 19 posts · 4 votes
    6y

    @Kyle J. @Sudhanshu Singha

    That’s kind of what I was wondering in regards to what utilities follow the tenant and what stay with the property. I am from Michigan so I’m not sure if each state has separate laws for that, but which utilities stay with the property ? The last thing I want is to have an encumbrance on the property when I go to sell it later down the road. 

    0Reply
  • Matt Ziegler
    Rental Property Investor · Colorado Springs, CO · Member since 2020 · 433 posts · 284 votes
    6y

    Dzenan,

    I will agree with Daniel, tenants handle with a ‘revert to” policy in place with local utilities.

    This has worked well for us. Best of luck!

    1Reply
  • Kyle J.
    Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    6y
    Originally posted by @Dzenan Catic:

    @Kyle J. @Sudhanshu Singha

    That’s kind of what I was wondering in regards to what utilities follow the tenant and what stay with the property. I am from Michigan so I’m not sure if each state has separate laws for that, but which utilities stay with the property ? The last thing I want is to have an encumbrance on the property when I go to sell it later down the road. 

    It's not state specific.  It's more "micro" than that.  It can be city/county specific or sometimes even utility specific.  

    For example, I have multiple water companies that operate in one of the cities I invest in.  Some can attach to the property if the bill isn't paid, and some can't (and they're in the same city).  

    So it's best to find out which specific utilities service your specific property, and ask them what happens if the bills don't get paid.  Do the bills follow the tenant, or can they attach to the property, is basically what you want to know.

    1Reply
  • Dzenan Catic
    OP
    Realtor · Grand Rapids, MI · Member since 2019 · 19 posts · 4 votes
    6y

    @Kyle J. 

    Thanks man, I appreciate the information! This helps a lot. 

    0Reply
  • Dzenan Catic
    OP
    Realtor · Grand Rapids, MI · Member since 2019 · 19 posts · 4 votes
    6y

    @Daniel Haberkost @Matt Ziegler


    Thanks for the response guys. I will look into that! 

    1Reply
  • Anne Jenkins
    Investor · PA · Member since 2019 · 54 posts · 51 votes
    6y

    I have property in a town where the borough bills for water, sewer and trash and it is lienable. (that is the city can sell your property to recoop the unpaid bill)   In this case I write my lease to be for $x rent and $x dollars for utilities....but I stipulate that the payment is only an advance payment of estimated billing....once the 1/4 bill comes in I reconcile the difference.... too much they get a rebate....to little they owe me.   Now... my lease says I will average it out for 1 year.  There is a quarterly adjustment to the prepaid utilities.   So far has worked well.   
    For most of my properties sewer is a lienable bill ...and is in my case fixed....so I just include that in my rent figures.   All other utilities get transferred into the tenants name and you heard the rest above.

    2Reply
  • Dzenan Catic
    OP
    Realtor · Grand Rapids, MI · Member since 2019 · 19 posts · 4 votes
    6y

    @Anne Jenkins thank you! I like that you do it that way. I might do that as well as soon as I find out what the lienable bills in my area are. 

    0Reply
  • Curtis Mears
    Property Manager · Raleigh, NC · Member since 2014 · 728 posts · 596 votes
    6y

    @Dzenan Catic

    My tenants are responsible for all utilities. I do not worry about them as my understanding is any balance.follows the tenant, not the property.

    0Reply
  • Dylan TanakaPro Member
    Real Estate Agent · Detroit, MI · Member since 2008 · 455 posts · 178 votes
    6y

    @Dzenan Catic tenants should pay electric, gas, get a water bill form from your municipality to make them responsible and even offer them renters insurance for a few bucks per month.

    Everything’s roses until it’s not!

    0Reply
  • Dzenan Catic
    OP
    Realtor · Grand Rapids, MI · Member since 2019 · 19 posts · 4 votes
    6y

    @Dylan Tanaka

    Thanks for the response. Who do you use for renters insurance for the tenants ? 

    0Reply
  • Nicole Heasley Beitenman
    Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes
    6y

    Tenants put all utilities in their name when permissible. For utilities that follow the property and cannot be put in the tenant's name, I invoice them each month with their base rent through RentmindMe.

    0Reply
  • Alvin Uy
    Rental Property Investor · Los Angeles · Member since 2019 · 284 posts · 184 votes
    6y

    Im in Los Angeles, I have nine doors.  All my SFRs' utilities are all under tenants names... once they move out.  Some of the utilities (like gas) automatically reverts back to my name to avoid shut down and restart fees.    I have a 4plex... where there is only one meter going to all properties, I currently have to pay for this water bill and I hate it.  Im looking into separating the meter for all the units.

    0Reply
  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    6y

    @Dzenan Catic Pass along as many of the utilities as you can to the tenant when renting out a single family. The electric, gas, water/sewer are a given. They will be able to put their gas & electric in their name with no issues, the town/city may require you keep the water/sewer in your name, but you can bill them for it. 

    Definitely make sure to pass the responsibility of the snow removal on to them also, lawn maintenance can also be passed along, but you may want to take care of that because some tenants do not keep up with it as well as they should. 

    1Reply
  • Dzenan Catic
    OP
    Realtor · Grand Rapids, MI · Member since 2019 · 19 posts · 4 votes
    6y

    @Nicole Heasley Beitenman

    Thanks for that! Can tenants pay you online through  Rentmindme or do you use another software for that? 

    0Reply
  • Dzenan Catic
    OP
    Realtor · Grand Rapids, MI · Member since 2019 · 19 posts · 4 votes
    6y

    @Michael Noto

    Got it, thanks for the info! 

    1Reply
  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    6y

    No problem @Dzenan Catic. Best of luck. 

    0Reply
  • Reno Gervasi
    Rental Property Investor · MA · Member since 2020 · 2 posts · 1 vote
    6y
    Great info from all! Thanks!
    0Reply
  • Ron H.
    Investor · Melbourne, FL · Member since 2017 · 159 posts · 116 votes
    6y

    Tenant pays me a fixed amount into an escrow account (paper acct only) for water/sewer.  Escrow amount set slightly higher than expected owed amount.  Once a year I adjust escrow payment to match usage.  At moveout I reimburse for any overpayment.  This way I am sure water gets paid and is fair to the tenant also. 

    2Reply
  • Nicole Heasley Beitenman
    Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes
    6y
    Originally posted by @Dzenan Catic:

    @Nicole Heasley Beitenman

    Thanks for that! Can tenants pay you online through  Rentmindme or do you use another software for that? 

     They can pay online through RentmindMe!

    1Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    6y
    Originally posted by @Curtis Mears:

    @Dzenan Catic

    My tenants are responsible for all utilities. I do not worry about them as my understanding is any balance.follows the tenant, not the property.

     Depends on the state. When I was in Ohio, municipal utilities were lienable on a property, so we recommended all landlords get copies of the billing so they would know if they needed to withhold deposit on a tenant run-off or address it some other way. But this was almost 20 years ago, I don't know if utility bills are still a lien on the property. @James Wise @Nicole Heasley Beitenman . 

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  • Avery CarlBusiness Member
    Real Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes
    6y

    @JD Martin leinable on the property? Ouch, that sounds like a pain, especially if you have a bunch of units!

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  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    6y
    Originally posted by @Avery Carl:

    @JD Martin leinable on the property? Ouch, that sounds like a pain, especially if you have a bunch of units!

     Yeah, it can be not only a real hassle but a lot of money too! 

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