All Forum Posts by: Jorge Caceres

@Jorge Caceres When we have to include heat in our rent we just raise the price accordingly to the max comparable amount that other similar units are getting.

I’m not sure you can reasonably expect that you are going to recoup 70%-100% of the heat/AC costs. It’s just the nature of the beast.

With MTR you are probably just going to be stuck.

With my LTRs I have been switching to all tenant paid utilities after my first winter where I discovered the majority of my tenants were setting the heat at 78 (which is unreasonable in Northern New Hampshire) and leaving their windows open in -20 degree weather.

Best case scenario for you maybe do a “utility allowance “.

$1000/m for heating costs? are you sure? I would get that looked at. But again im not from cali

@Allen Duan Has a great point that I fully agree with (look at from tenant's perspective). I cannot fathom having a MTR that required the family we are hosting to setup their own utilities.

This property is in the mountains and has electric heat, so the main bill comes in the winter when the heat is running.  

We took the highest month of "normal" winter usage we had records on -- people in the house, heat running at a reasonable temperature, washer/dryer running, etc.  We then added about 50%, rounding up to a round number.  That's our cap.

The only time we have seen an electric bill higher is when contractors were in there working and using a ton of electricity for industrial heaters for a month.  I think you'd really have to work hard by mining bitcoin, leave the windows open in winter with heat on full blast, or something similarly unusual to exceed the cap.

Ignoring the numbers for a second, let's think of the customer's (tenant's) point of view. No MTR tenant wants to open an utilities account in their name for a few months. It's expected and common for MTRs to have utilities included. View it as a business expense like you do the mortgage. 

Now for the numbers part, since all MTRs include utilities, the market MTR rates should have that baked in already. In other words, all the other MTR hosts are dealing with the same expense.

To control this expense, I always recommend an utility cap where tenants are charged for any usage over an established dollar amount. 

Hi Jorge! You could increase the rent by a fixed amount to account for utilities, but a more flexible strategy might be to set a utility cap (e.g., $500/month) included in the rent and require tenants to pay for any overages. This approach helps manage costs while providing predictability for tenants.

Our medium term lease covers utilities but includes a cap for electricity.  Its generous and I don't think anyone would go over it with normal usage.  If someone was over during a high consumption month I'd give then a notice/warning for the first month along with some energy consumption tips then tack it onto the rent.

@Jorge Caceres  how big is this property?   I would definitely go with a utility cap.  You aren't trying to nickel and dime people but just to curb abuse so it should be generous. The issue will be if you have a number of rooms and a single abuser.  I have a long term rental where I had to put in a clause that I would fine for open windows in winter. That tenant is gone now but it is something I go over on occupancy as unacceptable. 

Hey, that's a good question. I don't have experience renting in California, but if your competition includes it, I'd probably want to consider it too. If your cheaper but I have to worry about utilities that I have to also possibly set up that could be as high as $1000 a month, that definitely factors into my decision.