Do You Pay Utility Bills For Your Investment Property Or Does Your Tenant Pay?
So here’s a question that I get sometimes from careful investors – about utility payments in the case of investment properties. If you own a property and you live in it, there is no question that you pay for the utilities. But, if you're the owner of a home you’ve bought as an investment and there is a tenant you’ve leased the property to, who pays in these cases?
Payment of utility bills of an investment property.
There are a lot of recurring /monthly payments that one has to make in respect of any property. As the owner of the property you are typically required to make timely payments of your mortgage installments, property taxes and insurance premiums. You would also pay for property management, and as owner, repair expenses as and when required. However, this is all you have to pay for. As owner or lessor, you are generally not required to pay for the utility bills.
Apart from the other expenses, there are these utility bill payments to be made: There are electricity bills, gas bills and water bills, payments to be made for garbage collection or disposal, sewage management etc. You pay for what you use – this is the rule of thumb. So in the case of rented properties, nine times out of 10, it is the tenant who pays for these utilities. In the case of practically all single family homes or duplexes, it is the tenant who will pick up the tab for the utilities. However, there are exceptions.
In some of the big apartment complexes, it is the landlord or property owner who pays for utilities. The reason for this is that a lot of these complexes do not have separate meters. This means a lot of extra expense for the landlord that invests in apartments rather than single family homes. Suppose you have a tenant who loves having tub baths twice a day or who has no regard for shutting off electrical appliances – this would mean a lot of extra expenses for the landlord. Knowing that the landlord is picking up the utilities tab could be why that tenant doesn’t care.
Another reason to opt for single family homes.
And this brings me to one of my favorite bits of advice to give real estate investors: choose to invest in single family homes rather than condos or flats in big apartment complexes. Right now, it is the sunbelt states that are offering good opportunities for real estate investors.
The large metropolitan areas in the sunbelt states are where the commercial activity is, where the industries are. This is where the jobs are, and where young people and families are looking to rent homes. With COVID still lurking in corners, people are still wary of being in close proximity with others; they prefer independent homes to apartments with common or shared areas.
Here's What We Know About Real Estate Two Years into the COVID Pandemic
How we live and where we live – this is a big part of the American Dream. The spacious suburbs, a corner of the world to call one's own, a yard to throw around a ball with the kids or maybe pets… these are all part of the American Dream. In other words, people want single family homes in good localities, with good schools nearby, a secure and peaceful life for the family. Now, two years of living with COVID, this is more so than ever before, as I explained to a gathering of Silicon Valley investors recently.
I have always recommended brand new single family homes as the best option for real estate investors. Brand new is best, because you have a brand new heating and cooling system, a new roof, and things are still within the builder’s guarantee. Owners will have little trouble with renters when everything is new and not likely to break down or need repairs. So in my view brand new homes are always a good idea, and I have nearly four decades of experience and hundreds of my own investments to back me up!
Right now, with our experience of COVID, single family homes have become even more desirable. Families do not want to live in shared spaces with common areas such as in apartment buildings. Independent houses are the best bet; preferably new homes where no one has stayed before seem very attractive indeed. This is something I have explained via magazine articles, TV shows and our live events as well.
My advice for real estate investing – Warren Buffett agrees!
The real game changer in my view is the Fannie Mae loans or the 30-year fixed-rate loans that are unique in the USA. I often have to convince non-Americans that this is real because it simply doesn’t exist in most other countries! These loans are impervious to inflation and the 30-year long term of repayment makes them a gift that no American can afford to pass up if they are serious about creating wealth for themselves.
Think about it… 30 years ago, a postage stamp was 4 cents, today it is 55 cents. In New York City you could watch a movie for $2 then; today it costs you 16 dollars! Thanks to inflation, that loan is going to become easier and easier to repay over the 30 year duration. So Warren Buffet and I agreed on the merit of the 30-year loan, as Entrepreneur Magazine reported recently. Buying as many single family homes as possible is going to help you pay for your kids’ education, buy that fancy car, and basically live out your retirement years not just comfortably, but wealthily!
Another aspect of real estate investing that I now recommend is choosing to invest in the metropolitan areas of the Sun Belt states. Addressing the Realty 411 event, I explain how I started out my investing career and why today, states like Nevada, Arizona, Texas, Oklahoma, Louisiana, Alabama, Georgia, and Florida are a better option than the northern states. Check out the video, and learn more about securing your future and achieving your financial goals.
Looking For An Investment Road Map You Can Trust? Look No Further
How long should you research before you decide to start implementing your plan to invest in real estate? 10 years? 20 years? 30 years? And what resources do you need and which bootcamps do you need to attend before you finally take the plunge? It may surprise readers to know that a lot of people think all of this is necessary, but it really is not! Real estate investing is actually a lot simpler and much less intimidating that you may think it is. You will find that things readily fall into place when you use what they call The Adiel Method.
Read my book!
When people ask me for a resource that will help to guide them on their quest to create future wealth for themselves and their family, I recommend a book. Full disclosure, that book is written by me, but it is an excellent resource for those looking to learn how to start investing in real estate – even if I do say so myself! Read the book“Remote Control Retirement Riches: How to Change Your Future with Rental Homes,” which you can get off of Amazon right now for a few dollars. This is a simple road map that will help you achieve your financial goals. Whether it is your kids’ education, a fancy car, elder-care for your loved ones, or even just a truck load of fine chocolate if you so wish!
The point I'm making here is that you don’t really need a lot of resources to start investing. Do your due-diligence by all means – read up about the markets, read up about the documentation required, find out about the local regulations etc. But the formula for real estate investing is fairly simple and you don’t need to go to bootcamp for it – just attending one of ourquarterly expos could resolve your questions and help you get started.
Anyone can do it.
We have had young people and middle aged people and senior folk start on their investing journey. We’ve had people who want to buy one home and we've had people who want to buy 10, 20 or 100 homes. My formula is simple: choose to buy single family homes in large metropolitan areas of the Sun Belt states. Avail the 30-year fixed-rate loan and make the minimum down payment. Then hand over its management to a property manager so that you start to earn yourself a tidy amount in rent; which will also help you in repaying your loan. And now prepare to do absolutely nothing – because that is how you prepare for your retirement riches: by doing nothing!
Still want some guidance on this whole business of real estate investing? Well, we at ICG Real Estate are happy to help. All the resources you need to learn more about real estate investing, we make available to you for free. Call us or meet us in person. Remember, real estate investing is simpler and more rewarding than you think!
There Are Many Reasons To Hire A Real Estate Agent – And No Reason Not To!
Oftentimes, people think that a real estate agent is an unnecessary indulgence. You are just buying property after all; it’s not rocket science! For my money however, I would go with a real estate agent every time – and as someone who has decades of experience and hundreds of properties as investment, I’d say I know what I'm talking about!
There are 5 reasons why involving a real estate agent is a great idea.
Expertise – In the real estate space, market insight counts for a lot. It tells you where to buy property, when to buy, the sort of documentation required. A real estate agent is basically someone to show you the ropes so that you don’t end up making some very expensive newbie mistakes. This is very important when you're buying a home as an investment; something that you hope will increase in value over the years. The agent is aware of current market trends, whether a particular region is growing or stagnating, and will be able to make educated predictions.
Contacts – They work in the area and in the real estate space so they have all the right contacts with the builders, with property managers, and so on. This can ease a lot of processes for you; smoothen your path so to speak. The personal equation a real estate agent has with these people could even get you a better deal in some cases.
Local knowledge – This one is especially important if you're living in one corner of the country and investing in a whole other corner thousands of miles away. Now you definitely need someone with insight and contacts, who will guide you about local regulations and so on. If you're looking to have your property start to generate a passive income in the form of rent, this local knowledge comes in very handy.
Experience – As a professional you're surely good at your job. This is because you have training and knowledge, and you have done it for a while. In the real estate space as well, on-the-job experience is invaluable. Wise counsel from a seasoned, experienced real estate professional could make the difference between a great investment and a dud.
It is free – Also, what reason could you possibly have not to hire a real estate agent? You're not going out of pocket on this; you pay nothing. It is the seller who will be paying, so there is really no reason not to involve a real estate agent in the process.
Finally of course, it is your call whether you want to use the services of a real estate agent or not. For my money, I would absolutely use the services of such an expert. Not only would I save myself a lot of headaches, I even stand a chance of getting better deals because of the collective bargaining power some of these guys have!Reach out to us to know more about ourexpo events or services, or if you have any questions.
ICG uses single-family home investments, bought in advantageous locations and the best U.S. markets. We enable you to enjoy the clout that comes from purchasing a multitude of houses, even if you only buy one.
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