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.
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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