I've purchased a number of homes with utilities off.

There are two ways one can utilize these “creative” strategies.  

Okay, (imo) utilizing financing to profit is the least utilized strategy; but a close second is the straight optionI’m not referring to the lease option that some use successfully when leasing a SFR to a tenant - I’m referring to a straight option to purchase.Let me provide an actual example. 

You need to follow your state laws first regarding the utilities.

Flat monthly utility reimbursement (most common)This is what you’re already thinking about and it’s usually the cleanest solution.• Calculate a 12-month average of total utilities• Divide by unit count (or bedroom count if uneven)• Charge a flat monthly utility reimbursement as a separate line itemExample:$600 total utilities ÷ 2 units = $300 per unitYou might charge $150–$200 per unit and absorb the rest.Pros:• Predictable for tenants• Easy to explain• No submeter install cost• Works well when rents are below marketCons:• Owner still carries some usage riskThis is very common and generally accepted by tenants if disclosed clearly.2.

And to be responsible for utilities and any damage occurring for failure to heat the property.  

I pay all utilities. 

In California, yes a security deposit can be used to cover unpaid obligations that were the tenant’s responsibility under the lease, as long as you provide an itemized deduction within 21 days and proper documentation.Under CA Civil Code §1950.5, a landlord may deduct from the deposit for:Unpaid rentUnpaid utilities the tenant was contractually responsible forDamage or losses beyond normal wear and tearOther necessary costs incurred because the tenant failed to meet lease obligationsIn your case:1.

Manage it yourself dude, you'll learn a ton and save a lot of money!

I see a lot of new investors come in with rent projections that are way higher than what the comps actually support, which can throw off the whole deal.It’s also worth paying close attention to whether the units are separately metered for utilities, especially with small multifamily.