Include water bill in rent?

Question

Hello everybody!

I’m in the process of buying my first duplex (which will be my first rental ever) and have a quick questions about utilities.

I will be living in the upper unit while I am inheriting and trying to keep the downstairs tenants.

Question——

The previous owner gave them quite a deal on their rent which included all utilities. (Gas, water, electric)

While I don’t feel comfortable going the same route in the case they would take advantage of high heat or lights on 24/7.

I want to have them pay for utilities, looking around online and even a few rentals in the area, it seems like it’s common to have the landlord pay for water.  The City I live in the water bill includes water/sewer/garbage.

Just curious if this is common for most people here to pay for tenants water, all utilities or none at all?

Thanks!

Cameron Schmahl · Answer

Ok, it’s an older unit but both units are 100% separate.

The only thing I will have to figure out is outside electrical plugs since previous homeowner liked a lot of outdoor decorations.

So I can easily Bill gas.

Electric I would figure out which outdoor go to which unit.

And water would easily be separate too.

According to previous landlord, water for the tenants runs around $140 (quarterly).

Just curious as to do research it seems like a lot of people either factor it all in rent or just strictly pay water.

As for lease we will officially be starting one in a month under our ownership. I would still give them 3 month warning before things change.

Thanks for all the answers so far. Just trying to get my bearing and do things right.

Eric James · Answer

If they aren't separately metered you need to see what type of billing is allowed in your area. Or have separate meters installed

Dan L. · Answer

It really depends on where you live, also. The water bill in my City is only about $250 for the year. $20 per month per unit. If it's easy for me to do it, I have the tenant pay the water. If it's not easy, I just factor it into the cost of rent.  If I was to do a major rehab, then yeah I would split out the utilities at that point.

Theresa Harris · Answer

A couple of things to check:

-are there separate water and electric meters for each of the units?  If not, it will be harder to have them billed separately.  You can factor it into the rent (get bills for the last 1-2 years so you know the costs) or split the bill 50:50.

-are they on a lease?  You will need to wait until the lease is up to change the terms of the lease.  Check your local laws to see how much notice you need to give them (30-60 days is standard, but some places it is 90 days).

Darius Ogloza · Answer

Do be careful.  In some states there are consumer/renter protection laws which prohibit you from charging for utilities that are not separately metered.

James Mc Ree · Answer

Electric is usually relatively easy to separate, but be careful you don't get yourself into a "rewire the property" project.  All you want to do is put each unit on its own meter.

Fuel and water are hard to separate without doing a remodel.  You might just have to agree with the tenant on how to divide it or you charge a flat fee to the tenant in the rent and adjust it annually.  Sewer is a function of water and can be treated similarly.

You can probably agree to split trash 50/50 as that is probably the easiest of them all in terms of allocation.

The hard administrative part is how to collect all this from your tenant.  It's a hassle to give them a stack of bills each month with various calculations.  That's why it's usually easier to bundle them into rent and adjust the bundle cost annually.  You don't want to have to argue over who should be paying more because somebody washed their car last month.

Hunter Vigneault · Answer

It will vary by location and asset type, though it is increasingly common to have the tenants pay for water separately. It is usually difficult and expensive to physically separate meters/plumbing on existing older properties, but is the best way to do it. Some landlords will take the bill and divide it based on bedrooms (as a proxy for people in a unit) or by square footage, but you need to be familiar with the law in your specific area because this may not be allowed at all or may only have limited ways to charge back legally.