Budgeting is crucial when any tenant moves into a new apartment. The cost for the apartment utilities is an expense that can easily become a source of stress for many shoppers, as it can sometimes be hard to estimate exactly how much these costs will really add up to. Many people who are looking to rent a place are drawn to the properties offering all utilities included, as it eliminates the guesswork for them on how much money they will be spending every month.

As a landlord, you may be considering marketing your property as an “all utilities included” rental to help entice shoppers to sign a lease with you, however many costs can often be overlooked. Since utility expenses can add up quickly, it's essential to consider all of them before a lease is signed. It’s necessary to estimate what utility costs will be after your tenants move in and plan some ways to have your tenants help to keep these costs lower.

Determine the utilities that will be included in your lease agreement

If you are considering offering all utilities included, it’s essential to determine which utilities you really mean. Most frequently, “all utilities included” refers to electric, water, and trash, but it can also sometimes include cable, internet and propane. If you offer a really low monthly rental rate, chances are you will be having your tenants cover their own cost of utilities, but by raising the rental rate some, you can offer your tenants the peace of mind of not having to worry about the unexpected, surprise expenses that come in the form of high electric bills or a rate hike for their cable.

Before you agree to pick up all of the costs, consider each utility bill that will come in and what to expect:

Electric Bill

It is usually the electricity bill that will be the largest portion of the total cost of the utilities, so it’s important to know what you’re paying for. Two major contributing factors will determine the extent of your electricity bill. One is the size of the apartment. A bigger apartment means a larger space to heat or cool. Be sure to also consider the height of your ceiling space as this can affect your electric bill.

You will also want to consider how many people will be living at your property. A larger number of people or roommates is the second contributing factor that determines the extent of your electricity bill. This is pretty self-explanatory. If you have multiple tenants, more lights will be on and more appliances will be used, and that will contribute to a significantly higher bill.

Tips to help lower the Electricity Bill

You can find ways to preventatively cut down on a hefty electric bill. These simple tips could help:



·     Make sure your appliances are energy efficient and in excellent condition. 

·     Perform routine maintenance to change or clean any dirty filters and vents. Proper maintenance will lead to more energy-efficient appliances.

Gas Bill

The gas bill could be tricky to estimate. This cost will depend on how much your tenants decide to cook at home and use their gas stove, if applicable. The most you can do is to make sure the stove that is installed at the property is in good working order to be as efficient as possible. Luckily, gas appliances are cheaper than their electric counterparts. Even if your tenants are passionate about cooking and they cook every night, the cost of the cooking gas shouldn’t equate to the cost of electricity when using an electric stove. If the property has a gas fireplace, be sure to take that into consideration, as it will consume a large amount of gas if your tenants use it regularly.

Heating

Depending on the type of unit, the cost of heating will be included in either the electric or gas bill. An average gas-operated heater could consume around $40 per month. Electricity, on the other hand, is more expensive and could come in at about $160 per month.  If you are unsure of average heating costs, call the electric company and ask for an estimate of the previous year for that address. Although the total costs will vary based upon the climate that year, it’s a good starting point to understand what is normal.

Internet Bill

The internet is another apartment essential that’s easily overlooked. Before deciding on what internet service plan to offer, think about how most people are using their internet nowadays. Kids are doing online school, people are working from home more frequently, and everyone is streaming games and movies. If you are going to include internet in your utility package, make sure the speed will support the expected number of tenants for your unit. Although “free” internet will be a perk to your tenant, if it does not perform well, then it will only create frustration for them, which will take away from the overall experience they enjoy while leasing your property. 

Cable Bill

The cable is also an optional expense, and many can get by without subscribing to cable. The number of users who cancel their cable services, often in favor of less expensive Internet-based options in the U.S., is expected to reach 33 million this year. But if you definitely want to offer cable to your tenants, consider what is reasonable to offer to them, while at the same time not breaking your bank. Lower tier packages might suit the needs of the situation just fine and can be as cheap as $10.

Before you market your rental property as “All Utilities Included”, be sure to do a little research and consider all of the expenses that will be included in those costs. It is important to plan your expenses accordingly, in order to set your rental rate at the right price and maintain your anticipated profit margin.

Thousand Hills Realty is Branson’s premier property management company and we would be happy to assist you in deciding if offering all utilities included is the best choice for you as the owner. Call us today at (417) 337-8081.