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The Basics on How to Split Utilities Between Tenants

Did you know about 39 million people live in apartments in the United States?

Many of these people share building spaces with other tenants. As a landlord, you are likely going to get charged utilities for the entire building.

So now the challenge is how to split utilities between tenants. This guide gives you some tips on how to arrange tenant payments fairly.

Number of Tenants

One way you can go about paying utilities is to divide it by the number of tenants who live in your apartment building. This means counting the number of apartments there are and giving everybody an equal split.

So, let's say the building had about $5,000 of utilities for the month. You have 10 apartments in your apartment building. In this scenario, you would charge each tenant $500 for their utilities.

This can be a good way to do it because you use the same formula to come up with everybody's share every month. It can help you save time dividing up utilities and help you come up with a concrete amount.

Flat Fee

An even simpler way to do this is to come up with a flat fee to charge each tenant for utilities. You can do this by simply including it in your rental price.

As a result, you would charge slightly higher rent but get to promote the fact that utilities are included. However, you have to look at your situation carefully to determine if this is a good idea.

Is there a lot of variance with your utility bills? What is your average utility bill each month?

The reason why this is so important is that you have no protection if a tenant ends up abusing your utilities. Make sure you account for this and that it doesn't end up making a sizeable difference.

Size of the Apartment

This alternative is good for landlords who have apartments of varying sizes. You could have studio apartments, one-bedroom, and two-bedroom apartments all in the same building.

Charging people by square footage could be one of the fairest ways to determine a utility bill. Heating and cooling a bigger apartment tends to be more difficult. In some cases, you may even need a second HVAC unit for those two-bedroom apartments.

It could also mean bigger apartments need more electric outlets or have more people using those outlets at one time. You could decide to charge those bigger apartments accordingly for this.

Decide How to Split Utilities Between Tenants

These are some ways to come up with utility agreements with your tenants. You will have to review each of these options and decide which one is best for you.

Do you need help deciding how to split utilities between tenants? Wolfnest is the place for you.

We are a property management company that started with only a single-family unit. Now, we manage investment properties with an ownership mentality to help you succeed.

Do you want to learn more about our services in Salt Lake City, Utah? Message us here to get started.

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