One of the biggest questions landlords face is whether to include utilities in the rent. All rental property owners are in the real estate business with a goal of maximizing cash flow and there are arguments supporting utilities inclusion in the price of rent. Perhaps your rental unit does not have its own meter or you're unsure as to how you would charge "per person".
Innovative Property Solutions likes to look at both side of the coin, however here are four reasons why you may not want to include utilities in the price of rent:
Your life is easier. When tenants put utilities in their own names, you need not worthy about collecting payments or taking phone calls for late payment. In addition, you don't have to bill them. At the end of the day, it doesn't fall on your shoulders to ensure that their lights stay on. It is the responsibility of the tenant to make sure the water is running, the lights are on and the phone doesn't go dead. Another burden has been lifted from your already loaded landlord shoulders.
Secondary is the fact that your utilities will only go up. Tenants won't be so concerned with turning off the lights when leaving the home or plugging in every gadget known to man twenty-four hours a day. It won't matter if the windows are open while the AC is blasting and it won't cost them a dime if little Johnny accidentally left the refrigerator door open during their two-week vacation because nothing is coming out of their pockets.
Quality is key. Tenants who have good track records paying utilities will have no problem assuming responsibility for payment of utilities. They are likely used to paying bills on time and will be more conservative with the AC, heat, water or electricity if they are financially responsible for these items. You are likely putting yourself in a better position to retain a higher caliber, top-quality tenant.
Let's face it. Dealing with utility companies is a real time suck and you already have enough on your plate without sitting on hold with the gas company for hours on end. You could possibly profit from the inclusion of utilities, but time is money and stress is dangerous to your health. Isn't the goal in life to decrease stress and increase time? Let those high caliber tenants handle the job and enjoy life!
In closing, you won't have to hear complaints of "I didn't use that much water" or "I wasn't even home that day". No one can argue usage and refute the bill. This means you won't be chasing down cash for payment of utilities.
Every landlord is different and properties differ in many degrees. At the end of the day, you have to decide what works best for you and how much time and energy you are willing to expend. Of course, if you hired a property management company, you wouldn't have to worry about a thing.