Splitting utilities in a duplex

18 Replies

We are about to close on a duplex that has separate electric but only one furnace, AC and hot water heater. Anyone have ideas on how to best split the utilities or bill back to the renters?

Currently there is only one thermostat at the lower unit so I can see them cranking up the heat and then the renter upstairs is roasting so they open all the windows (duplex is in Wisconsin, so cold winters)

We looked into electronic dampers with a second thermostat upstairs, but still have concerns about how to best / fairly split the bill. (The AC is on the downstairs unit electric bill).


Thanks!

This is tough. Generally in a duplex you need a thermostat and an AC for each unit, unless there is a way for them to control the temperature another way. The hot water heater is easy to maybe split the payments equally, as in many cases it makes a small difference of the usage on the bill.  

for the AC, one easy option is to put adjustable vents in the units and move the thermostat out of one of the units and make it set to some permanent temperature (e.g. 72 degrees) which you can control. This can be accomplished with a Nest thermostat or putting a locked cover over it.  This way each unit can open and close the vents when the temperature must be adjusted.  There are some smart vents on the market you can get and give control to the tenants: 
https://www.postscapes.com/wireless-vent-keen/

Hope this helps

The situation you describe is reality in Wisconsin in many older rentals.  One of my clients used to have a quad where one tenant controlled the heat for all the units and yes, what you described happened.  It helps if you send the controlling tenant a letter stating you would like the heat to be no higher than 73.  I feel you may not have too much of a problem though because the tenant with the control will likely be looking out for their pocketbook as well as since they will be paying for utilities. 

Before you move the thermostat you could go a slightly less expensive route of a smart thermostat which would allow you to "monitor" the temperature remotely. However you have to use this with caution. It must be stated in the lease at what point you would remotely adjust the thermostat and you must declare what you will set it to. You should never remotely turn off the heat setting but rather monitor the temperature it is set to.

John and Corina, thank you both for your replies, they were both very helpful!

I think my initial plan will be to install a "chicago controls" thermostat (allows min/max settings) in the main floor unit and then hope for the best upstairs ;-)

I did search the forums a bit and many suggest using smart thermostats but I'm not sure how that would work unless you are providing the WiFi or you ask the tenant to allow you to connect the smart thermostat to their wifi.

I'm putting heat pumps, as well as heat pump water heaters in the duplex I'm working on now.  I'm in Southern Maine and have found that tenants are willing to pay for heat when there is ac.  The systems are so efficient that I'm able to keep my rent prices at or very close to market rates.

It's more costly than a thermostat, but a permanent solution could be to remove the ducts from the 2nd unit giving the 1st unit the entire use of the AC system. Then you could have one of those Ductless Mini Split systems installed in the 2nd unit. They often mount on the wall (can even do a ceiling vent if desired) and then a small compressor outside. I'm thinking about putting one in an extra unit I'll be adding to a triplex later this year. 

As for the payment for water, that's also something in looking into for this triplex. Right now, I'm leaning towards RUBS (Ratio Utilities Billing System) which is just a calculation based on factors like occupants per unit and such. I would then just tack the water bill onto their rent invoice. 


Be careful of shared air especially right now that is illegal in some places. I have had that come up in the past in a 3 Plex and ended up with a huge bill and 3 new furnaces. Something to think about anyways.

@David Nelsen - I would first recommend splitting the hot water heaters (especially if traditional tank heater). You have no control over what time of day your tenants will shower (empty the tank) and if too close together, someone will be complaining they have no hot water. As for the AC & Furnace I would suggest buying a thermostat lock box; buy a smart thermostat that can switch from heat to cool on its own; set it and forget it. Without splitting the units you will probably still get complaints about about the temperature. If you are honest upfront with the tenants you might suppress some of that noise since they've been fairly warned. However, until you find the right tenant willing to adjust and accept the situation, this could lead to a high turnaround rate on the units. Depending on the cost of vacancy and your current financial situation, it might be best to spend the money upfront and just split the units.

@David Nelsen I have somewhat of a similar topic with my new property. Its a two story home with three separate units (almost as a triplex, you could say). The first floor has a 3/2 and 1/1 attached on the other side of the wall, which shares the electricity bill. The washer and dryer room for the community is also attached to the first floor's meter. The upstairs 2/1 is separately metered and billed on its own. I'm in the works of figuring out billing, but i think the best course of action is raising the rent $100 for each unit and state, "utilities included"; however, i could ending up paying a major bill, if they get careless with electricity use. Its something i need to figure out since i will have tenants moving in soon. Maybe you could use a similar approach?

Derrick- Yes the shared air was not allowed by the city to follow code I could not have shared air so each of my 3 units had to have there own separate system even though it was not that way before. When I bought the building in had one forced air furnace servicing all 3 units.

Lawrence, yes it is a challenge with all the shared amenities too. We have a shared laundry in our basement as well. When a property wasn't originally built as a duplex it seems having things intermingled is the norm. We are going to do as you noted and just have the "utilities included". My concern is that raises the rent price and when people are scanning the listings they may see our rent as being "too high" and not even click on the link and see that the price includes utilities. We plan to put something in the lease to the effect of "your rent includes a $XXX credit for utilities, if utilities consistently are above the credit then the rent will be adjusted accordingly". We also will be doing what they call budget billing where we pay a set fee per month for six months and then the utility company goes back and makes sure that still covers our cost and then they will adjust the budget billing amount for the next six month cycle (either up or down based on the actual usage).

Dennis, thank you for your reply. We decided to start by putting in one of the "Chicago Controls" thermostats on the main unit. www.landlordthermostats.com

I felt I would get complaints with the automatic setback type thermostat (automatically sets heat back to 68 every three hours) so we got the one that limits heat to 73 degrees and AC to 72 degrees.

I plan to be open and honest with them and tell them about this so there are no surprises.

Originally posted by @David Nelsen :

Lawrence, yes it is a challenge with all the shared amenities too. We have a shared laundry in our basement as well. When a property wasn't originally built as a duplex it seems having things intermingled is the norm. We are going to do as you noted and just have the "utilities included". My concern is that raises the rent price and when people are scanning the listings they may see our rent as being "too high" and not even click on the link and see that the price includes utilities. We plan to put something in the lease to the effect of "your rent includes a $XXX credit for utilities, if utilities consistently are above the credit then the rent will be adjusted accordingly". We also will be doing what they call budget billing where we pay a set fee per month for six months and then the utility company goes back and makes sure that still covers our cost and then they will adjust the budget billing amount for the next six month cycle (either up or down based on the actual usage).

 I feel like the higher rent when scanning listings is a valid concern. I wonder if you can advertise the rent as $XYZ which is not inclusive of the utilities and then as they inquire about the property and you give them information you tell them there is a $X/mo utilities fee. Similar how on AirBnB they give the nightly rate, but when you go to check out there are cleaning fees and similar added on. I'm not sure how a potential renter would like this approach. But if you think about it, there's always the "extra fee" of utilities whether they pay you or a utilities company. So maybe you shouldn't decrease your marketability by advertising a higher rent. Just a thought. 

We have a similar situation with a duplex (upstairs / downstairs); water and electric are separate and heat is shared.  The heat is natural gas with cast iron radiators throughout the house.  Leaning towards removing the radiators in the upstairs unit and installing a ductless system.  We are in Northeastern PA.

Originally posted by @Nicholas Morgan :
Originally posted by @David Nelsen:

Lawrence, yes it is a challenge with all the shared amenities too. We have a shared laundry in our basement as well. When a property wasn't originally built as a duplex it seems having things intermingled is the norm. We are going to do as you noted and just have the "utilities included". My concern is that raises the rent price and when people are scanning the listings they may see our rent as being "too high" and not even click on the link and see that the price includes utilities. We plan to put something in the lease to the effect of "your rent includes a $XXX credit for utilities, if utilities consistently are above the credit then the rent will be adjusted accordingly". We also will be doing what they call budget billing where we pay a set fee per month for six months and then the utility company goes back and makes sure that still covers our cost and then they will adjust the budget billing amount for the next six month cycle (either up or down based on the actual usage).

 I feel like the higher rent when scanning listings is a valid concern. I wonder if you can advertise the rent as $XYZ which is not inclusive of the utilities and then as they inquire about the property and you give them information you tell them there is a $X/mo utilities fee. Similar how on AirBnB they give the nightly rate, but when you go to check out there are cleaning fees and similar added on. I'm not sure how a potential renter would like this approach. But if you think about it, there's always the "extra fee" of utilities whether they pay you or a utilities company. So maybe you shouldn't decrease your marketability by advertising a higher rent. Just a thought. 

I like this idea. I think I will do that and even within the listing note that the full total rent is $XYZ which includes $X amount for utilities. It's also how airlines like Spirit, Frontier, etc have such low rates, but by the time you pick your seat, add a carry on, etc. now you are paying about the same as the regular carriers.

@David Nelsen I really like this idea. I'm going to utilize this when pricing. I can see this being a hassle for pricing on the platform, depending which one you're using. It would probably work better to gain more views by listing the lower rent and explain in the full description about the rent credit, as you said. As for my case, id have to allocate the credit accordingly, since the main unit is a 3/2 and the other one is a 1/1. I'd have to charge a higher utility credit for the bigger unit. This will all be solved once i invest in solar panels!