How to Market Rental with Utilities Included

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How to Market Rental with Utilities Included

Michael Archard
Rental Property Investor · Framingham, MA · Member since 2019 · 27 posts · 8 votes

Hi BP,

I have a B+ class 2bed/2bath condo that I'm preparing to list for rent. The market rent without utilities is about $2,100 which I have verified with local agents and property managers. The condo is in a midrise building with the $525 HOA covering all utilities (unmetered), amenities (pool, gym, game room, etc), parking, snow removal, security, master insurance. My goal is to get at least $2,300 per month.

I have been told by an agent to price it at $2,300/month with everything included. I have been told by another agent to price it at the market value of $2,100 with a flat rate of $200 for utilities/amenities. I have even been told by a local real estate investor to drop the rent to $1,775 and have the renter cover the full $525 HOA value.

Has anyone had luck with one particular approach? I am leaning towards the $2,300/month option but do not want to miss potential quality applicants that might be using strict price filters while they search. 

 Thanks in advance! 

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Greg WeikBusiness Member
Property Manager · Denver, CO · Member since 2020 · 264 posts · 327 votes
5y

As others have said, do not have your tenant pay HOA dues (who is the Realtor who suggested this?!)

Market rent is pretty straightforward with all utilities included.  Most websites (Zillow, Facebook Marketplace) have provisions for listing utilities included.  I'd check Zillow for listings in your building since the $525 covers them.  Ultimately, it's worth exactly what someone will pay for it right?  Closely track inquiries and you'll know if you've overshot.  Don't wait more than a week to drop the price if it's quiet out there. 

A word of caution, however, is to never say "all utilities" are included.  You always want to specify that, for example, trash concierge service is not included :) 

Here's how we setup the utility portion of every description paragraph for our listings: 

INCLUDED UTILITIES: Trash Removal.

TENANT PAID UTILITIES: All other utilities paid by tenant.

303-586-5560
Real Estate Solutions4.4379 Reviews
WebsiteView Page
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  • Aaron K.
    Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
    5y

    I'd check on other comps that also include utilities, they should be available even if only in your own complex, that should give you the best idea of what to do.

    1Reply
  • Gavin WelchPro Member
    Real Estate Broker · Lakeland, FL · Member since 2011 · 305 posts · 181 votes
    5y
    Michael, I'm not sure of your market, but in mine, the higher the rent typically the more quality the tenant (not always).  You can also always lower the price if you don't get any interest but you can't raise it.  So I would start high and then lower if you don't get anyone.  Alos, check rentometer and zillow and see what the surrounding properties are renting for. 
    Good luck
    G
    2Reply
  • Michael Archard
    OP
    Rental Property Investor · Framingham, MA · Member since 2019 · 27 posts · 8 votes
    5y
    Originally posted by @Gavin Welch:
    Michael, I'm not sure of your market, but in mine, the higher the rent typically the more quality the tenant (not always).  You can also always lower the price if you don't get any interest but you can't raise it.  So I would start high and then lower if you don't get anyone.  Alos, check rentometer and zillow and see what the surrounding properties are renting for. 
    Good luck
    G

    Thanks Gavin. I like your strategy to start high and work down from there. 

    0Reply
  • Gavin WelchPro Member
    Real Estate Broker · Lakeland, FL · Member since 2011 · 305 posts · 181 votes
    5y

    @Michael Archard you will know you are in the ballpark if you get a lot of showing requests.. If you get "crickets" .. then you are too high.. 

    0Reply
  • Kris L.
    San Antonio, TX · Member since 2019 · 930 posts · 836 votes
    5y

    @Michael Archard

    All I can say is make sure you aren't having your tenant paying the HOA directly. Great way to get fined if the tenants forget.

    0Reply
  • Mike McCarthy
    Investor · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    5y

    @Michael Archard I think it depends on your competition. If the places you’re up against charge $2100 + utilities, I’d price it at $2050 + utilities.

    Most renters know what range they are in, and you want yours popping up with other properties they are comparing to. If you price it at $1750 + HOA fees, you're falling into a different category of renter... same if you price it higher all inclusive.

    In the end, your final tenant will do the math and figure out how much the are actually paying. You’re just making sure you get it in front of their eyeballs so they can make that decision.

    1Reply
  • Michael Archard
    OP
    Rental Property Investor · Framingham, MA · Member since 2019 · 27 posts · 8 votes
    5y
    Originally posted by @Mike McCarthy:

    @Michael Archard I think it depends on your competition. If the places you’re up against charge $2100 + utilities, I’d price it at $2050 + utilities.

    Most renters know what range they are in, and you want yours popping up with other properties they are comparing to. If you price it at $1750 + HOA fees, you're falling into a different category of renter... same if you price it higher all inclusive.

    In the end, your final tenant will do the math and figure out how much the are actually paying. You’re just making sure you get it in front of their eyeballs so they can make that decision.

    Thanks, Mike. Great way of looking at it. 

    0Reply
  • Greg WeikBusiness Member
    Property Manager · Denver, CO · Member since 2020 · 264 posts · 327 votes
    5y

    As others have said, do not have your tenant pay HOA dues (who is the Realtor who suggested this?!)

    Market rent is pretty straightforward with all utilities included.  Most websites (Zillow, Facebook Marketplace) have provisions for listing utilities included.  I'd check Zillow for listings in your building since the $525 covers them.  Ultimately, it's worth exactly what someone will pay for it right?  Closely track inquiries and you'll know if you've overshot.  Don't wait more than a week to drop the price if it's quiet out there. 

    A word of caution, however, is to never say "all utilities" are included.  You always want to specify that, for example, trash concierge service is not included :) 

    Here's how we setup the utility portion of every description paragraph for our listings: 

    INCLUDED UTILITIES: Trash Removal.

    TENANT PAID UTILITIES: All other utilities paid by tenant.

    303-586-5560
    Real Estate Solutions4.4379 Reviews
    WebsiteView Page
    2Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    5y

    @Michael Archard I am assuming your competition is apartments. A condo is basically an apartment unit that you own. It is fairly common in apartments to have head, garbage and water paid. That means often the only utilities in an apartment are electricity and internet. Other amenities like gym, pool, etc. are just included at apartments. Make sure your $200 premium is really representative of apartment utility costs. I would list it for $2100 and show the utilities as a fixed rate $200. That way you are not lost in filters. Market the fixed rate as an advantage. People like the idea of not having variable costs. Just make sure that $200 is competitive. If an apartment budget for utilities is $120, then you are overpriced by $80.

    1Reply
  • Account Closed
    San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
    5y

    One way to get additional income is to allow pets (if your HOA allows them) and charge a pet fee (if allowed by your laws) and higher deposit.

    I managed a 25 unit building with all utilities included: electric/gas/water/sewer/garbage.  My experience is that most tenants are able to do that math if they have been renters before, and know if the overall rent plus whatever utilities you are including - is a good price or not.

    I agree that if your phone is ringing off the hook, you're definitely in the ball park.  If it's really ringing off the hook, you might be too cheap.

    1Reply
  • Michael Archard
    OP
    Rental Property Investor · Framingham, MA · Member since 2019 · 27 posts · 8 votes
    5y
    Originally posted by @Joe Splitrock:

    @Michael Archard I am assuming your competition is apartments. A condo is basically an apartment unit that you own. It is fairly common in apartments to have head, garbage and water paid. That means often the only utilities in an apartment are electricity and internet. Other amenities like gym, pool, etc. are just included at apartments. Make sure your $200 premium is really representative of apartment utility costs. I would list it for $2100 and show the utilities as a fixed rate $200. That way you are not lost in filters. Market the fixed rate as an advantage. People like the idea of not having variable costs. Just make sure that $200 is competitive. If an apartment budget for utilities is $120, then you are overpriced by $80.

    Thanks, Joe. Most apartments in my area do not include utilities. But I agree with your thoughts on marketing the fixed rate utility. I renovated with higher end features like recessed lighting throughout, steam shower and heated tile in both bathrooms so I have a lot to upsell with the fixed utility cost. Thanks again. 

    0Reply
  • Michael Archard
    OP
    Rental Property Investor · Framingham, MA · Member since 2019 · 27 posts · 8 votes
    5y
    Originally posted by @Account Closed:

    One way to get additional income is to allow pets (if your HOA allows them) and charge a pet fee (if allowed by your laws) and higher deposit.

    I managed a 25 unit building with all utilities included: electric/gas/water/sewer/garbage.  My experience is that most tenants are able to do that math if they have been renters before, and know if the overall rent plus whatever utilities you are including - is a good price or not.

    I agree that if your phone is ringing off the hook, you're definitely in the ball park.  If it's really ringing off the hook, you might be too cheap.

    Thanks, Sue. Unfortunately pets aren't allowed but I agree! I'm hoping applicants see the value either way. 

    0Reply
  • Michael Archard
    OP
    Rental Property Investor · Framingham, MA · Member since 2019 · 27 posts · 8 votes
    5y
    Originally posted by @Greg Weik:

    As others have said, do not have your tenant pay HOA dues (who is the Realtor who suggested this?!)

    Market rent is pretty straightforward with all utilities included.  Most websites (Zillow, Facebook Marketplace) have provisions for listing utilities included.  I'd check Zillow for listings in your building since the $525 covers them.  Ultimately, it's worth exactly what someone will pay for it right?  Closely track inquiries and you'll know if you've overshot.  Don't wait more than a week to drop the price if it's quiet out there. 

    A word of caution, however, is to never say "all utilities" are included.  You always want to specify that, for example, trash concierge service is not included :) 

    Here's how we setup the utility portion of every description paragraph for our listings: 

    INCLUDED UTILITIES: Trash Removal.

    TENANT PAID UTILITIES: All other utilities paid by tenant.



     Thanks, Greg. 

    0Reply
  • Account Closed
    San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
    5y

    Also, is there anything unique about your particular unit?  Upstairs - so they don't have to hear anyone above them (really important to a lot of tenants), first floor unit (older tenants, especially, love them, also better for disabled) has hardwood floors (tenants love them), is a corner unit (so fewer neighbors, more windows), closer to the parking lot (important to tenants) - market it with anything that's unique or better about your unit.

    0Reply
  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    5y

    If you have a decent condo rental presence with utilities included your competition will be a good index of what something will go for. Price accordingly.  I would say $2300 heat/electric included in the header.   People will  assume apartments/condos include trash, water and sewer the differentiator is heat/electric. Some people prefer the all in one approach because they can't budget for variable costs. 

    1Reply
  • Max T.
    Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    5y

    @Michael Archard

    It doesn’t matter which option you go with. You want tenants who can read the fine print, not tenants who need to be tricked.

    0Reply
  • Account Closed
    Hayward, CA · Member since 2017 · 48 posts · 55 votes
    5y

    If it was me I most definitely be setting the rent price low and the utilities as a separate item.  I don't want you to be missed by the prospective renters that put a rent filter on their search at $2200 (or whatever price) and are seeing and considering places that are effectively more expensive than yours because yours includes utilities and the $2200 places doesn't include anything.

    Often, I am already face to face with a prospective tenant handing them an application before they even start asking about if any utilities are included.  

    1Reply
  • David Robinson
    Specialist · Huntsville, AL · Member since 2020 · 200 posts · 105 votes
    5y

    @Michael Archard Just curious on what you would do if electric went up past your average? What if tenant decides to mine bitcoin, is that electric covered too?

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

    Does your competition include utilities with their monthly rent? This would be the one thing I would research and would advertise accordingly. I am surprised you are getting so many different opinions on how to list, usually markets have norms for things like this. 

    0Reply
  • Jaquetta T Ragland
    Real Estate Agent · Winston Salem, NC · Member since 2014 · 486 posts · 303 votes
    5y

    @Michael Archard I'm not in favor of option 3 since some people may not like the idea of paying $525 for HOA. It's a mental thing...kinda of like paying $10 for product w/ $5.99 f

    shipping instead of $15.99 w/ free shipping 🤷🏽‍♀️ lol

    1Reply
  • Michael Archard
    OP
    Rental Property Investor · Framingham, MA · Member since 2019 · 27 posts · 8 votes
    5y

    @David Robinson

    David as stated above the utilities are unmetered and covered by the HOA so it's effectively an "unlimited" situation. Coincidentally enough I did mine Bitcoin when I lived there for that very reason!

    2Reply
  • Michael Archard
    OP
    Rental Property Investor · Framingham, MA · Member since 2019 · 27 posts · 8 votes
    5y

    @Michael Noto

    Michael my competition does not include utilities which is why I want to make sure I’m playing myself strategically in the market.

    0Reply
  • Michael Archard
    OP
    Rental Property Investor · Framingham, MA · Member since 2019 · 27 posts · 8 votes
    5y

    @Jaquetta Turner

    I agree! I’m leaning towards the “free utilities” option but I’ll have to make sure I keep a close eye on things.

    0Reply
  • Michael Archard
    OP
    Rental Property Investor · Framingham, MA · Member since 2019 · 27 posts · 8 votes
    5y

    @Joe Silva

    Thanks Joe. This is my exact feeling as well. I’m going to try the “all included” approach for a week or so and change to the market rate plus fixed utilities if I’m not getting enough applicants.

    0Reply
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