All Forum Posts by: Tom Amon

What I do for common areas & security lights is I move that circuit onto one of the tenants' electric panels.  With our utility provider, it is allowed as long as there an executed contract between lessor and lessee (I use an addendum) and what the utilities are being used for is disclosed.

It can get a little tricky if its extensive use, espeically if there are receptacles that are accessible to other tenants, so in that case I would use a house meter.

Here's an example of an addendum:

Both parties to this agreement acknowledge and understand that the heat and electric service for the building’s basement as well as two exterior security lights are tied to the aforementioned rental unit. The basement is directly under this rental unit, and is not accessible or used by tenants nor is it a common area of the building. The only use of basement electricity would be occasional use by landlord for maintenance and/or repairs. The monthly impact on the tenant’s electric utility bill is expected to be de minimis.

A $10.00 credit in monthly base rent will be established to offset this use of electricity.

The basement heating is served by the rental unit’s high-efficiency gas-fired furnace, and aims to keep the basement crawlspace above freezing during periods of extreme cold in the winter months (typically December, January, and February) to avoid freezing plumbing pipes. The crawlspace will receive small amounts of warm air whenever the rental unit’s living room thermostat calls for heat, which is exclusively controlled by the tenant.

In addition to the aforementioned monthly credit for the electricity use, during the months of January, February and March, a $50.00 reduction in monthly base rent will be established to accommodate for the use of gas to heat the basement during the winter. This additional credit is issued if the utilities were in the tenant’s name on the preceding month. (i.e. January’s credit is for December’s usage, etc.)

The intent of this agreement is to provide transparency for the tenant as to the utilities assigned to the rental unit. Please note that the reduction in rent exceeds the expected impact of the shared utilities on the tenant’s utility bill.

If you have a basement common area as you describe, you could install a timer on the light switch, and enclose/lock receptacles that would be for your use for repair or maintenance.  You could hardwire in washer/dryer.  Key is to avoid receptacles that could be used by other tenants, which creates a shared metering situation, and if a tenant complains, it's a big headache with the provider as they will launch an investigation and could require you to install a house meter as well as reimburse all of the tenant's utility bills since move-in.  I have seen that situation occur.

He's in Ohio, so there's no need to bring up what other states do.

You need to calculate a fair amount and reduce the rent on both tenants to cover the cost.

Look at a utility bill and you'll see how minimal this impact is. Most of the utility bill costs are base fees. Since the common area doesn't have a meter, you don't have to pay base fees. So you only need to reimburse tenants for actual use.

Look at the actual use for both tenants. Let's say they both use $60 in electricity for a total of $120. The common area probably comprises less than 20% of their total. That's $24 per month or $12 per tenant. It's not even worth talking about.

If you want to get into the weeds, calculate how much energy each item uses (dryer, washer, light bulb, security camera, etc.). Add up the kWh per item, then deduct that from their bills.

It's a complete waste of time. Your common area uses a small percentage. Ensure the common area is equally split between the tenants, put it in writing that their rent includes that cost, and call it a day.

Hi Josiah! Is there a reason you're taking your investment property to a conventional loan? Wouldn't you prefer to put your investments in an LLC for further protection?