Should You Include Utilities?

 

To include or not include the cost of utilities with tenants. This is a question many landlords will have to face during their career. Often the size of the building will dictate the decision. For example, a landlord probably isn’t going to cover the utilities of a 24-unite building, there are too many variables. But why would you WANT to include utilities? Here’s both sides.

 

If the property was a SFH and is now a multifamily unit, there’s a chance the building is not separately metered. The hassle of getting this done isn’t worth the time, so in this case, including utilities makes sense. Often the price is relatively small and it’s easy to come up with a number that works. You might even be able to upcharge and make some extra cashflow.

 

Some buildings choose to do a utility reimbursement program that divides up utilities on square footage. This doesn’t make a ton of sense to me because tenants can always complain they didn’t use as much as their being charged for. I’d stay away from this unless you already have it in place.

 

In most cases having the tenant pay their own bill is the way to go. From a consumption standpoint, making them see and pay for the bill will hopefully lead to them using less electricity. It will also get you off the hook for additional interactions with the utility company – because no one wants to make those calls. 

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