Should you include utilities in your rental listing? Want us to take a look at your specific case? Let's chat about it: info@thinkto.ca
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As an investor, we want to help you get the most out of your properties.
So, should you include or exclude utilities in your rental listing? This can depend on a few factors, and may come down to personal preference - there are pros and cons to each. What do we mean? There’s really three main ways to charge utilities. You can:
Have the tenants set up accounts, and pay according to the unit’s usage
Charge a flat fee per month on top of the rental
Or Include them fully in the rental price
Set up their own accounts:
This method involves having your tenants pay directly to the utility companies according to their own usage.
You can pass on rising energy costs directly to the tenant.
If utilities are included in the rent, you can only raise the rent by the percentage set by the province, meaning you may not be able to keep up with inflation.
This can also attract more savvy tenants who want to decide their own costs.
Tenants are smart, and they know what they’re paying for.
Do you have the choice to have the tenants set up their own utilities? A little while ago we talked about adding extra hydro metres to your property. If you have more than one tenant in your property, but they aren’t separately metered, this option really isn’t available for you.
A flat fee:
If you don’t have a separate metre but still want to pass on the costs of the utilities to your tenants a way to do this could be charging a set monthly fee. There’s two common ways to structure this:
A flat fee, say $200 a month for a unit.
Or a percentage of the total utilities. 30% for a basement of a house is a common example.
This option doesn’t really appeal to many tenants. Although it is a fixed cost, tenants are often turned off by this because they can’t control the costs, and will almost always feel that they are getting the bad end of the deal.
Included in the rental price:
These first two options allow you to have a lower listing price, getting more potential tenants in the door to view the listing. If this is less of a concern, you may want to include the utilities in the rental price.
You won’t be able to pass on any increases in cost to utilities in this case, but it keeps things simple with a flat overall rental price.
You’ll have to keep up with the payments yourself in this option.
A good choice if you don’t have the infrastructure to let the tenants set up an account themselves
This can be more appealing to first time renters or students - those that are inexperienced with setting up utilities. If you have a lower priced unit, this could be your best option.
Of course you can always mix and match, there isn’t one right combination of these. You can include water in the rental price but have the tenant cover gas and hydro. The choice comes down to the type of tenant you want to attract, and which of these options you’re able to offer based on your properties’ design.
If you have questions about how you should structure your listing, or are thinking about a tenant focused reno - reach out, let’s talk about it!
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