Determining rent if owner pays electricity?

Question

Any good tips, or strategies to making sure you don't lose a lot of money renting a unit when you (as the owner) are responsible for the electricity bill? Can you incorporate something in the lease regarding a tenant paying a fluctuating electric bill... or do you just charge your tenants more rent to cover the cost? What happens if you charge too little and are stuck with an expensive 12 month lease? Any feedback on this subject would be awesome. Thank you!

Christian Bors · Answer

You can give them power strips and swap out light bulbs for energy efficient bulbs.  For outdoor lighting, I would install a sensor or timer so a tenant wouldn't accidently leave the light on during the day.  Also, if the heating source is electric, you might want to consider adding gas furnace, ductless mini split or a heat pump.  Baseboard heating can be very expensive.

I know some landlords will usually put a limit on the amount covered by the landlord.  For example, some landlords will pay for the first $100 dollars.  After that, the tenant is responsible for paying the remainder.  This is more common in multi families where the utilities are not split.  As far as; "stuck with an expensive lease?" if your lease states the landlord is responsible for the bills it can be a long 12 months.  You could try to renegotiate with the tenant, but a lease is binding to both parties.  So if the tenant doesn't agree, you might be SOL.  However, sometimes its cheaper to buy them out, rewrite the lease, then put in a new tenant.  Before I would do something like that, I would call the electric company and ask what the bills were for the past 12 months.  They can also give you some tips on saving on your bill!

Good luck,

CB

Account Closed · Answer

Awesome this helps a lot! Thank you!