All Forum Posts by: Omer Sultan

Hello BiggerPockets Community!

I'm trying to figure out the best way to handle my utility expenses on a rental property. I haven't closed on a property yet (I actually haven't even made an offer yet *sweat-smile emoji* <---look that up on Google if you don't know what that is because it's pretty spot-on), but I've got my sights set on purchasing some student housing in a small college town in Upstate New York. Most of the properties I've been looking at are single-family homes that were turned into multi-family homes to accommodate a larger number of occupants. The way I see it, there are 3 options when it comes to billing tenants for utilities:

Option A) There are separate utility meters and the tenants are responsible for paying their own utilities. Simple.

Option B) There aren't separate utility meters, so you charge each tenant a predetermined monthly utility fee. For example: $100 per month per tenant regardless of their consumption (which could end up being higher or lower).

Option C) There aren't separate utility meters, so you charge the tenants a variable monthly utility fee based on their consumption. For example: I receive a total of $1,000 in utility bills on a given month for a single property containing 8 tenants. Each tenant is therefore responsible for their rent + an additional $125 for that month ($1,000 / 8 = $125).

Are there any flaws with any of these options that I'm overlooking? Are there any other options besides these three?

Thanks in advance BiggerPockets Community!

@Peter S. Yeah, it seems like the conservative thing to do is to assume that 50% of your gross rental income will be spent on expenses. Thanks for your help!

@Ronald Starusnak Thanks for providing that link. Super insightful!

@Jerid Meagan Thanks for that - super insightful!

@Anthony Rosa I'm looking at the Southern Tier of New York. Just under 200 miles northeast of New York City. $650/month for natural gas seems absurdly high, no?

@Mike McCarthy Thanks for your reply!

I guess I should've included a bit more information about my situation:

- I've got my sights set on Upstate New York for my first investment.

- The properties I've been looking at are mainly multi-family homes ranging in size from around 2,000 sqft up to around 4,500 sqft.

- My family's home that I've been using to estimate my expenses is a 2,500 sqft single-family house located on Long Island right outside of New York City (Southeast New York).

I hope this information helps!

Hello BiggerPockets Community!

I'm an aspiring real estate investor, and I'm looking for some insight into how I can properly estimate expenses when analyzing a potential rental property. I understand that certain properties will allow for the tenants to be responsible for their own utilities, but let's assume that that's not the case. I've been using the following figures, which I've sourced from my family's single-family home (as most of the properties I've been looking at are similar in size):

- Property Insurance = $175/month

- Maintenance & Repairs = $200/month

- Electric = $400/month

- Water = $200/month

- Misc. = $85/month

I've also been calculating Mortgage Payments, Property Taxes, and a 5% Vacancy Reserve separately. Do these figures sound about right? Am I missing anything worth noting?

Thanks in advance BiggerPockets Community!