Should You Include Utilities In The Rent?
Do you include your monthly utilities in the rent or do you have your tenants pay them on theirr own?
Some landlords like to keep the utilities in their name and other landlords find it better to have the utilities in the tenants name.
To help you determine what may be best I created a quick pros and cons list of why you may want to go either way.
The Pro’s and The Con’s
I’ll start this with the list of reasons why you might want to keep the utilities in your name.
The Pro’s
- It’s easier
- You know they will get paid
- Tenants can’t leave you with a big bill when they transfer utilities back to you early and vacate
The Con’s
- Tenants don’t pay for utilities, so they leave lights on, the heat set higher and windows open, all driving up your utility bill
- Higher utility costs cut into your overall cash flow
- Tenants end up being less responsible for their actions and ultimately less respectful of your property (note this is a generalization)
- You potentially have to rent your unit out for a higher amount as utilities are included
Now, here are the pros and cons of why you might want to have the utilities in the tenants name and removed from your name.
The Pro’s
- Tenants take more responsibility for utility costs
- You end up with better cash flow
- Tenants are more apt to update you about utility issues, ie dripping taps, furnace inefficiencies, window drafts
- If tenants skip out, the utility company goes after them (note some cities and towns have enacted legislation where the utility companies can get outstanding utilities from landlords, after all isn’t it the landlords fault? Wouldn’t want to penalize the profitable utility companies would we…)
- Your rent may appear lower as utilities are not rolled in
The Con’s
- Can cause issues with suited properties and bickering between tenants
- It’s harder to manage
If you cannot tell, there are pros for both sides and before I discovered some new strategies I always had tenants put utilities in their names.
I actually wrote about this in a. different post and if you’r interested in learning how you can even use it to increase cash flow, go take a read, Utilities Extra? In the end though, you have to make your own decision.