Don’t Trip Over Dollars to Pick Up Pennies

By
Services for Real Estate Pros with SCV Leasing, Inc.

I was reading some Tweets the other day on the landlord forum.  One Tweet in particular stood out.  Essentially, the individual, who was a tenant,  had just found out that the landlord was charging him for the cost of heat.  His Tweet asked, among other superlatives, “Do you know how expensive heat is?”

I almost fell off my chair laughing.  Yes, I know how expensive heat is.  That’s why I never pay for utilities in my rentals. It is that simple. I never invest in a property that does not have separate utility meters for each unit. Every tenant needs to be responsible for his or her own utility usage. So many property owners come to me with the idea that they need to pay the water. "I have such a beautiful yard,” an owner will say. “If I pay the water, the tenant is more likely to water it and keep it nice."

That is a fallacy. The tenant is no more likely to care for your landscape no matter who is paying the water bill. However, the tenant is more likely to take long showers, and not report a running toilet or a leaky faucet. Imagine if the tenant started a laundry washing service to make additional income. They do not have to pay the water bill, so why would they care? If possible, avoid paying for your tenant’s electric, water, sewer, trash, gas, propane, heating oil, or any other utility charge. 

The only exception to this might be when one of those services is included as part of your HOA dues. For example, some HOAs include trash or water service as part of the dues. Only under those exact circumstances should you agree to pay for a utility. 

Finally, do not forget to cancel any utilities that are in your name effective with the starting date of the lease. Many landlords fail to remember this simple procedure and end up paying for the tenant's utilities for a month or more. Then the landlord wants to be reimbursed. A battle will inevitably ensue over who owes what to whom. Avoid this battle altogether and schedule the cancellation calls on your calendar.

 

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Scott Taylor is the general manager and co-owner of SCV Leasing in Santa Clarita, California.  He is also the author of the forthcoming book The 15-Minute Landlord to be published by Amazon this spring.  

SCV Leasing serves Valencia, Stevenson Ranch, Newhall,  Santa Clarita,  Saugus,  Canyon Country, Fair Oaks Ranch,  Castaic, Sand Canyon, and Westridge with homes for rent, condos for rent, and property management services.  SCV Leasing’s unsurpassed marketing plan puts renters in properties fast.  Mr. Taylor can be reached at scott@scvleasing.com.

Comments (2)

Laura Gray
RE/MAX Realty Group - Gaithersburg, MD

Commom cents must prevail when anyone decides to become a LANLORD

Mar 15, 2010 11:31 AM
Liz Flint
Century 21 Hardee-Team Realty - Houston, TX
Houston\Tomball Realtor (832)816-8066

Hi Scott, great thoughts about utilities.

Mar 15, 2010 11:33 AM