Can I still rent as two units if utilities aren't split?

Question

I'm buying my first multifamily. It's in Orange NJ. It's a legal 3 family on tax records, but utilities aren't split between 2nd and 3rd floors. That includes, heat, hot water and electricity. Am I still able to rent them separately?

2nd floor is a 2/1 i'm converting to 3/1 and 3rd floor is a 1/1.

Bonus question: Would section8 count them as two units or one?

2nd floor is a 2/1 i'm converting to 3/1 and 3rd floor is a 1/1.

Bonus question: Would section8 count them as two units or one?

Robert Webb · Answer

Hey Christopher,

congrats on getting your place!!

If it is registered with the town as a legal 3 family, than there is no question that you can rent all 3 individually.

When it comes to utilities that is more tricky, you can chose to include utilities into the rental amount (which technically could help w Sec 8 since the tenant gets a percentage of their rent covered and if it has utilities includes that can take some additional burden off of the tenant). You could also try and sub meter the utilities (I know you can def do for water although you would have to do some research) or you could look into the cost of splitting utilities altogether, which if it were not too bad, I would personally make that choice.

I dont believe it should be an issue with sec8, when I filled out my form for my tenant it had a part that specifically broke down how utilities would work and who paid for what.

Hope this helps, anything else just let me know

beat of luck

Robert Webb

Christopher Prince-Barry · Answer

@John Teachout. I could put thermostats in each unit but they would control the same furnace.

John Walter · Answer

@Christopher Prince-Barry When I've seen this in the past, splitting utilities was written into the lease. For example, the larger unit would be responsible for 60% of utilities, and the smaller unit would be responsible for 40%.

That said, when I encountered this issue, I just called the electric company and had them install a new meter. As the owner, you're responsible for water for all units anyway (I assume) so that shouldn't be a worry. For me, PG&E is my utility company. I contacted them about installing a new meter, and a few months later, voila, they set everything up and the tenants can call to have the utilities entered into their names.

Joe Martella · Answer

Congrats!!  Doesn’t NJ have a process for 3 family properties and larger?  If it is sold as a 3 family you should have what they call a “green card”.  I think it is a required property inspection every 2 or 3 years.  You may have to have the inspection regardless if you rent it as a 2 family.  May have to check that out.  I am not too familiar - just want to get that on your radar.  Maybe someone on here can help?

Vaughn Smith · Answer

@Christopher Prince-Barry Congrats on the acquisition.To answer your questions yes if the property is a legal 3 family you should be able to rent all 3 units individually. If the place is a legal 3 unit all apartments have their own entry and exits and each unit can pass their inspection you should be paid by section 8 for all 3 units.

John Teachout · Answer

Billing back utilities can be tricky and including them in the rent is for sure going to lead to excess usage. Do the units each have their own thermostats?

Congrats on getting a property!

Can I still rent as two units if utilities aren't split?

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