As I see it I've been forced into monitoring utilities in two households.

In the past I would find out that they had an ongoing water drip or worse and now have six months of high water billing. Even routine visits with the maid didn't spot some of these problems because a sometimes working flapper, sometimes non working flapper would evade detection.

That was the past.

These days what I'm experiencing is people not knowing how to manage their utility bills. Whether paying on time or dividing the costs with roommates they are hopeless. I volunteered to help a few households only to learn that these folks take no notes and don't track any contributions towards bills.

No details. Just an amount paid...no date, no reference for what bill, no billing cycle dates etc.

Millennial moments.

After getting involved I can now see the average utility costs per shack. This has always concerned me. I want the shacks to use no energy whatsoever,. I want to be able to advertise last year's utility costs as a sample

In my market, I'm finding that my competition offers all inclusive rental prices. I have a lower rent price however I don't include utilities....in this way people will actually go elsewhere and overpay just so they only write one check. I'm losing good teni.

It is what it is, and I had better think of a way to compete.

I know in the commercial world a lease is written with some reference to taxes. In that spirit I was going to offer rent at 600 plus 100 towards utilities with some type of periodic review. If the utilities go over or under the 100 budget there would be an adjustment.

Any suggestions?

I forgot to say Thanks.

Thanks for any comments.

Why not just monitor as best you can and charge the estimated utility cost built in to the rent? You can make annual adjustments as needed.

Smoke, you've hit on an important concept: people will pay MORE if you make life CONVENIENT!

It's why currently 1/3 of my tenants choose to pay bi-weekly or bi-monthly vs.monthly, knowing in advance it costs them a premium.

You're right: they can't or won't budget. They can't or won't divvy up bills. They want it served up to them however they like it. They aren't thinking "thrifty" like you and me.

I say provide it to them, for a price. If your utils for a year average $100 month, charge them $150. The $600 extra you make will help offset any unanticipated spikes. For 4 roommates, that's only $12.50 extra per month...they won't even notice it! They drop more than that on 2 craft beers at the local micro-pub.

Offer them Internet that costs you $25/month for $40.

Offer them trash service that costs you $20/month for $35/month.

Better yet, off the "all-inclusive package" (trash, internet, utilities) for $200, a "savings" of 10% off the $225 price for al la carte.

See what we did there? We are now charging them $200/month included in their rent payment for services that cost us $145, so over a year's time we net $660....all for making things "convenient."

that is what I'm leaning towards. I will be watching these two shacks to see what the utilities average. These are big numbers. I would say utilities run close to $500 per month. I'm playing with $6,000 a year.

$500 sounds reasonable. Here new people without a referral have a $400 elect deposit they hold for a year. I think it's $100 for gas and water. That puts a big load on new tenants to come up with another $5-700 plus rent and deposit, $40 turn on fees, etc.

I think the key is to sell the no-headache flat rate and keep it separate (in their mind) from rent.

this is a ticking timebomb. folks will over-use that which they do not pay for. all inclusive tells them "use all you want, it's included". go read "the tragedy of the commons".

https://en.wikipedia.org/wiki/Tragedy_of_the_commons

if your pricing DOES cover that possibility that folks will gorge at the smorgy...then go for it. if not be ready to bleed. if you are including electric then you need to go through the place monthly to look for space heater, grow lamps, A/C's...all of which are FREE in an all inclusive plan

"Included" means "FREE" to a tenant. We once had a duplex without split power or water so we included them in the price...what a nightmare. EVERY SINGLE TENANT who ever lived there totally went wild with the power and water bills.

Tenant ran AC with windows open so they could feel the breeze.

Tenant filled neighbor's in-ground swimming pool with their "free" water.

Tenant took in laundry for a local day spa: all their towels and sheets, etc. After all, water for the wash and power for the dryer were "free!"

Tenants walked around a pool of water on ground for months. Cracked pipe, $5000 water bill.

I have three homes that I rent to elderly Mentally disabled and take care of all utilities, Cable, Internet, Mowing, trimming, landscape maintenance and weeds. When I budgeted everything I put in the lease that I can adjust (or Invoice) anytime that expenses are 30% more than budgeted. Plus at renewals, if expenses are less than 30% higher, I can use Utilities as the basis for increases. Problem solved on run away expenses!

I always talk about conservation methods with the providers and offer solutions on how to keep cost down at renewals. We install programmable thermostats and water flow restrictions and It works. Utilities were higher than expected the first year but not by much and going into the second year we are right on track. I make an extra $150 to $250 per house per month. Everything is on autopilot. I do nothing extra after its set up but track.

Utilities can be a sticky wicket.

I actually have a page that I place my rental agreement that depicts the utilities and who is responsible for those.

Technically some items are required to be read, and build on a bimonthly basis.

In my city. The city itself is adopting the standard that, it's okay to take from the landlord on the giving to the occupants, sadly, the state follows suite.

Years ago I put together a multiunit service fee agreement.

With my agreement. I'm very careful to include those items that are actually build to me that used by the occupants.

Items like water, sewer, garbage, whatever you might have.

Check your city and state statues and just be sure to never charge more than what your costs. In actuality are!

In the event you do it is likely that the housing police/city commissioners may come knocking at your door.

I have found that having a clear written agreement that is concise and that can be modified with notification. Is very helpful, in the agreement. I write that the occupant. Should they not accept the agreement does themselves have the right to close the rental agreement at any time.

In essence, without the agreement. They don't have a tenancy! Renters are like a box of chocolates and unless you know what you're going to get and you know who they are, where they been, what they've done in the past, you might be unpleasantly surprised.

Fair screening criteria, can get you someone who understands that there are utilities, and that if you're paying those that the rent and and/or will be adjusted based on their abilities to save or be wasteful.

My multiunit properties, I have actually had occupants contact me when there was over use. For example, sprinklers in the summer. Conjunctively. This runs up the water and the sewer bill.

Being prepared ahead of time and having agreement between yourselves and your occupants in writing,

Can and will give you a firm foothold.

One of the items in our town is garbage, over the last 15 years I have had that is a part of my multiunit service.

On single individual dwellings, I simply adjust the rent, higher to compensatory early reward myself. The city says that I'm responsible for the garbage as the owner.

So if the garbage is $40, I set my rent by adding an additional $55 for that garbage.

I do believe that having a mindset and the meaning of the minds is crucial, knowing that somebody's responsible financially means getting a active credit report showing their responsibility. And that I believe is a first of things to do to make sure that they understand their responsibility is equivalent to your responsibility!