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Discussion Starter #1
We are going to rent our condo as we bought a house just recently. I was surfing some housing search websites and realized that many landlord include the utilities in the rent asking price. I was wondering what is the reason behing that practice?

I assume that there are some sort of tax deductions available for these landlords, but are there any other incentives?

I am scared that if we include gaz, water and electricity, the tenants might abuse and we would have to pay for thei overconsumption at the end... especially since we have A/C in our condo.

So, what is the reason behing including utilities in the rent?

Many thanks,
 

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Pure speculation on my part, but:
- Might be in a converted building where individual metering was not practical to install, so utilities are essentially paid thru condo fees (or simply older condos that were built before separate metering became the norm for new construction.) Wastefulness of individual occupants is unimportant, as utility costs are averaged over all occupants;
- Might be a simple response to market demand for an all-inclusive rent, in order to attract tenants. Landlord assumes some risk, but could mitigate it by signing energy supply contracts, or by adding a substantial "cushion" to his base rent to allow for utility use fluctuations.
- Condo owners are competing in a market where rental apartments usually include utilities, because the building systems are not designed for individual apartment metering.
- Utility companies don't want the hassle of dealing with tenants if they can help it. They prefer to deal with owner. If you can't get the tenant to re-imburse you for the utility cost it's your problem, not theirs.
- If a landlord owns a number of properties, he can count on a certain turn-over rate, at which time he can re-adjust rent to reflect higher utility rates. He can keep his overall portfolio profitable, even though individual units may go into negative cash flow for a period.
 

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Discussion Starter #3
Does that mean that including utilities for my single real estate investment would not be relevant in my case?
 

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Does that mean that including utilities for my single real estate investment would not be relevant in my case?
No, you asked for possible reasons why you see condos being advertised with utilities included. You didn't ask if we thought it was good idea in your particular case. If it is your only investment it does increase your risk, but you have to look at the market and decide if you can successfully rent it if you don't include utilities.

You have to look at what percentage of your rental cost is for utilities; what would be the increase if tenant doubled consumption, or rates went up; and would you still be making a profit? What remedial measure might you be able to take to control consumption (low-flow shower heads/6L toilets/architectural improvements).
 

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I'm not sure where your condo is but certainly here in Toronto if the utilities are separately metered it is advisable to get the tenant to transfer them over into their names and verify that they have done so before handing over the keys.

Guru is right lots of older condos have utilities included in the maintenance fee as the buildings are not separately metered. In this case the owner includes the utilities.

The only utility that you cannot put in the tenant's name in Toronto is the water bill, the city will not let you transfer it to them... and they charge the tenant $16 per bill to mail it to the tenant. I deal with this issue by getting the bill mailed to the owner and just collect it from the tenant later.
 

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If at all possible, get your tenants to pay for their own utilities. There is nothing worse than having your tenant leave you with a $700 bill after they are evicted or do a midnight run...or even if they leave on 'good terms.'
 
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