Should you keep utilities in your name as a landlord?

Property Management Blog

Most landlords remain focused upon finding good quality tenants. They keep refining their tenant screening program to make sure they can keep out trouble tenants. Very few landlords ever think about getting utilities turned in the name of their tenants. Why is this important? Well, many landlords have realized their folly much later when they kept utilities in their name and passed on the cost to the tenants.

There are some landlords who charge an all-inclusive rent that is higher than the monthly rent charged by other landlords in their area. They do it to pay the cost of the utilities used by their tenants out of their own pocket. Then there are landlords who add the cost of the utilities to the monthly rent but keep these utilities in their own name. Finally, there are smart landlords who turn utilities in the names of their tenants and ask them to keep paying the cost according to their usage.

Why keeping utilities in your name is not advisable? 

To many landlords, ownership of utilities is the last thing on their mind. They are of the view that they can always recover the money from their tenants depending upon how much they use these utilities like electricity and gas. Here are some compelling reasons why it just doesn’t make sense to keep utilities in your name once you have a tenant living in your property.

You are made to do work for your tenants

You don’t realize that you are doing all the work for your tenant if you have the utilities in your name. You calculate the amount payable by him based on units of electricity and gas used by him. You are processing the bill for him and then also collecting the money from him. Why waste your time over processing of bill and collection when you can simply turn the utilities in his name? Bills for the utilities used by your tenant will eb despatched by utility companies directly in his name and he will be responsible for paying them on time. As a landlord, you already have so much work to do. Why take up this extra work while keeping your tenant relatively stress free?

Your tenants will misuse the utilities

If you keep utilities in your name, you will find that your tenants care little for the maintenance of the appliances and energy used every month. If you are charging a higher rent to cover the cost of the utilities used by the tenants, you will see your tenants misusing the appliances and electricity. This is because they know that they have a fixed rent to pay every month and they will have no incentive to save energy. You will not be able to say anything even if you see windows open and A/C running full blast. Never make the mistake of charging a higher all-inclusive rent from your tenants. Tenants will misuse the appliances leading to their faster wear and tear. You will ultimately find yourself paying more in terms of repairs and maintenance by not turning utilities in the name of your tenants.

You will have lower quality tenants

This might come as a surprise to you, but the fact is that you attract lower quality tenants when you allow them to live without turning utilities in their names. You will be approached by tenants who have a poor track record in terms of payment of utilities. Allowing such tenants in your rental property creates more troubles for you in future, both financial as well as mental.

Check yourself which of these problems you are facing on account of not turning utilities in the names of your tenants.

If you’d like to talk more about property management, or you need help with Everest Property Management, please contact us at Everest Realty. 

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