What is The Best Way to Charge for Utilities in an Apartment Building? - Article Banner

Whether or not you want to include utilities in the rental amount or keep them separate and billed according to usage is up to you. In a single-family rental home, it’s easy for tenants to set up their own accounts and manage their own utility bills. 

In an older apartment building, there might be a reason to pay the utilities yourself and then bill them back to the tenant. 

It’s not something we recommend. 

We prefer to have tenants responsible for their own utility accounts and payments. It’s easier for you as the landlord, it’s easier for the tenants as the residents of the property, and it’s easier for your management company, if you’re working with one. 

Tenants and Utility Accounts in Birmingham Apartments

You should always leave utilities entirely to the tenant. In single-family homes, there’s no one else using the water or the electricity or the gas. In a multi-family property, you can easily make sure that your building is set up to track usage and bill each unit individually, requiring tenants to establish their own accounts with local utility companies. 

In this case, tenants are generally responsible for their own utilities, and they’ll pay the bills based on usage. This will include electricity, gas, trash, and water. This is a simple option, leaving you out of the billing altogether. 

One drawback might be the communal utilities, such as electricity in the building lobby or water in a shared laundry room. You may be left covering those bills yourself since your residents are already paying their own utilities for their private units. You can include those expenses in the rental amount, however, the same way you would incorporate landscaping, pest control, etc.

Choosing Birmingham Investment Properties Wisely 

Consider how utilities will work before you invest in a new rental property. At Decas Group, we usually advise investors looking into multi-family properties to check the utility meters along with roof age, HVAC, foundation, etc. prior to purchase. You don’t want to close the deal and then realize that you have an older multi-family building with one meter that isn’t separated.

Cable, Internet, and Additional Services

What, exactly, is a utility?

While a rental property is not habitable without water and electricity, additional services like cable, internet, and smart home technology are optional services that most tenants can decide whether they need or don’t need. You are under no obligation to provide free cable or internet to their tenants. 

However, we know that many apartment communities are competing with one another, and one of the perks you might offer prospective tenants could be free basic cable or Wi-Fi. It makes your property more competitive on the market. 

Birmingham Property Management: Address Utilities in the Lease Agreement 

Whether you’re paying for all utilities or none of the utilities, make sure your lease agreement stipulates exactly who is responsible for paying which bills. This will ensure that you and your tenants are on the same page and everyone understands their responsibilities and expectations. 

Contact Property ManagementFor any questions about utilities or anything pertaining to Birmingham property management, please contact us at Decas Group.