Utilities flat in the rent, or a monthly cap the tenant goes over

Question

I am pricing my first furnished unit, a two bedroom, and the part I cannot decide is utilities. Every corporate listing I read says all inclusive. My gas bill on this building last winter ran $310 in January and $95 in July, and internet plus water plus electric adds maybe another $170 a month on average.

If I fold it all in flat, my quote is one number and the company signs without a second email. That seems to be the whole point of this niche, one price, no surprises for whoever is approving the expense. But a January tenant who keeps the thermostat at 76 costs me real money and I have no way to say anything about it once the lease is signed.

The alternative I keep seeing suggested is a cap, say $250 a month included, tenant pays the overage. That protects me in winter. It also means somebody has to read a bill, split it, invoice the tenant, and then chase a corporate accounts payable department for $60. For $60 I might rather just eat it.

There is a middle version where I quote flat but price the winter months higher, which feels honest but complicates the rate card.

For people who have actually done this, does the cap ever get used, or is it a clause that sits in the lease and never comes up? I would rather learn this before I write the lease than after.

renee_dubois · Answer

I ran caps on two furnished units for a year and invoiced an overage exactly once, for $41, and the company paid it eleven weeks later after four emails. The clause did nothing except make my quote harder to explain. Now I price flat and I build the winter into the annual number rather than the monthly one, so my rate is the same in January as in July and my spreadsheet knows why.

nicole_adeyemi · Answer

The cap earns its keep in one situation, which is a house with a bad envelope where the heating bill has a genuinely wide range. If your January is $310 and your July is $95, that is a $215 swing on a unit renting for what, $2,400 or so? That is under ten percent of rent and it averages out across a year. I would fold it in. If you had a drafty single family where January hit $700, I would write the cap and mean it.

ehernandez74 · Answer

Before you pick, ask what the person signing actually wants. A relocation coordinator is comparing your quote against a hotel per diem and they want one number they can drop into a form. Two numbers with a footnote means they have to explain your footnote to somebody in finance, and that is the moment they call the other operator. I would find out how the companies in your market get billed before I settled the lease language, because the answer probably comes from their side rather than yours.

tylerbrooks9 · Answer

Flat. One number, one invoice, no arguments in February about a thermostat.

laurenkim53 · Answer

Something nobody has said yet: if you put utilities in your name for the flat version, you own the account through vacancy too, and out where I am that is a $60 minimum bill on an empty house every month. Not huge, but if you sit eight weeks between corporate tenants twice a year, it is real. Ask your utility whether they will do a landlord revert account so the service does not get shut off between stays, because the reconnect fee is worse than the standing charge.

Utilities flat in the rent, or a monthly cap the tenant goes over

5 replies