Author Topic: All bills paid leases  (Read 1148 times)

bacchi

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All bills paid leases
« on: December 08, 2023, 12:19:55 PM »
I'd like to avoid switching over the tenant utilities for various reasons. What are the options to avoid the profligate waste that often accompanies all-bills-paid leases?

Let's assume the standard lease is $1200.

1) Lease for $1500 and just accept that the tenant might keep their AC at 67, heat at 80, and take baths every day.
2) Lease for $1500 and, if utilities are less than $300 for the month, credit the tenant the following month.
3) Lease for $1200 and pass through the charges.

Thoughts? Are 2) and 3) too complicated?

uniwelder

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Re: All bills paid leases
« Reply #1 on: December 08, 2023, 02:31:33 PM »
Can you expand more about why having the tenants paying utilities in their name is undesirable?  You shouldn't really be involved in the process, unless you're talking about the empty days between tenants if it's not transferring directly from one tenant to another. 

neo von retorch

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Re: All bills paid leases
« Reply #2 on: December 08, 2023, 02:58:53 PM »
When I started renting out rooms, I lived there, and could prevent thermostat craziness. But then I moved out, while still renting out individual rooms.

Before long... electric bills started creeping over $400 / month! After that, I did

4) Any electricity bill over $200 / month is split equally among renters and added to their rent due the next month.

That helped. But I would never do that again - I'd just put the utilities in their name if possible.

bacchi

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Re: All bills paid leases
« Reply #3 on: December 08, 2023, 04:32:38 PM »
Can you expand more about why having the tenants paying utilities in their name is undesirable?  You shouldn't really be involved in the process, unless you're talking about the empty days between tenants if it's not transferring directly from one tenant to another.

There's one water meter and one gas meter for the entire property and we live in one of the units. That'll be kept in our name and split (or accounted for on Schedule E).

As for the electricity, that could be transferred. However, the to-rent garage apartment is attached to the workshop/utility room and, if the tenant has the electric bill in their name, they'll be paying for power tools (not often but sometimes) and our laundry.

That gives me option 5).

5) Charge $1295, water and gas are included (maybe internet if we can mesh it out there), and they pay for our use of the clothes washer (hence the $1295 instead of $1300). I'll do all power tool work outside from the other unit's plugs.

eddy20

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Re: All bills paid leases
« Reply #4 on: December 10, 2023, 04:47:38 PM »
I would never do this, if the landlord pays the utilities the tenants will abuse the energy. My ADU where I pay the heat the tenant leaves all the windows open and the heat rolls out in the winter. Additionally the less attachment tenants have to the property makes them easier to vacate and move on. When they sing up for utilities they have more skin in the game and more hassle if they decide to vacate.

Bamboo67

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Re: All bills paid leases
« Reply #5 on: December 11, 2023, 06:50:32 AM »
Consider the local market dynamics and tenant preferences. Maybe a transparent conversation about energy conservation during the lease signing could set expectations regardless of the option you choose.

RWD

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Re: All bills paid leases
« Reply #6 on: December 11, 2023, 08:19:59 AM »
"Free" electricity might be an incentive for your tenants to mine crypto. You'd definitely need some sort of limits but I agree with others that it's just easier/fairer to have them pay their own utilities. Every place I've been a tenant I had to pay my own utilities.

Askel

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Re: All bills paid leases
« Reply #7 on: December 11, 2023, 08:36:34 AM »
"Free" electricity might be an incentive for your tenants to mine crypto. You'd definitely need some sort of limits but I agree with others that it's just easier/fairer to have them pay their own utilities. Every place I've been a tenant I had to pay my own utilities.

Haha, this reminds me of an apartment I rented back in college. Two things about it:
1. The thermostat for the whole building was downstairs in a bar that got crowded on saturday nights
2. For whatever reason, our electric meter didn't spin. 

So whenever the bar would get packed enough to keep the temperature up downstairs, it would get cold in the apartment.  But we had stacks and stacks of old computer equipment rescued from the dumpster we'd set to work on same shared computation project- I think SETI@home was big then, crypto didn't exist yet.  It wouldn't take long to get the temperature back to comfortable.  :D 

bacchi

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Re: All bills paid leases
« Reply #8 on: December 19, 2023, 12:04:11 PM »
Thanks, everyone. We'll transfer the electricity over, as recommended by consensus.