Include Utilities? No Way

In Episode 4 of the Smarter Landlording Podcast, Arnold Dormer and I were talking about screening tenants and what we look for in a good tenant. One of the points that Arnold made was that the tenant had to be able to get the utilities turned on in their name. I could not agree with Arnold more.

Yes, I know some landlords keep the utilities in their names and then add the cost onto the rent. Or they charge a higher rent because the utilities are included. Personally and professionally, I do not prefer to keep the utilities in my name. Here is why.

1. It Creates Extra Work – If you keep the utilities in your name and then bill the tenants you have just given yourself new jobs as a bill processer and collector. You now have extra paperwork, more phone calls and more hassle to deal with. I do not need this extra work. I already have enough to do.
2. It Is Not Worth It – Instead of billing the tenant every month, you can just charge higher rent to cover the utility costs. Yes, you may cover your costs and you may even make a little money but I doubt it. Your tenants will have no incentive to save energy and will run the heat and air full blast, with the windows open and acting as a thermostat. This all acts to increase the wear and tear on your equipment and increase the costs. But the real reason it is not worth it is because the….
3. Tenant Quality Seems To Be Lower – Tenants who cannot get utilities placed in their own names usually have had some sort of financial trouble and either have not paid their bills or are just hanging on. These types of tenants, in my experience, tend to be more trouble than they are worth. They are unstable and will generate more problems, more phone calls, be late in paying their rent more often and just be more trouble. And I do not want more trouble.

So do you include utilities? If you have, what has been your experience? Has it been similar to mine and Arnolds? Let me know with your comments.