Who Pays for Utilities in Kansas City Rentals?
Let’s first start with what the utilities are that someone needs to pay for. There are six utilities that you should think about when looking at any rental property, not every one applies to every building, but make sure you think about these six as you look at purchasing any property.
- Electric
- Gas
- Water/Sewer
- Trash
- Lawn/Landscaping
- Snow Removal
- Electric – powers the outlets and lights including any electric appliances, electric stove, and central or window air conditioning. Heat can be electric or gas, more commonly it is gas in KC but it can be either. Some new construction is all electric. Some buildings that used to have boiler heat now have electric heat. It is important to know what is electric on your property when it can be electric or gas.
- Gas – furnaces burn gas to generate heat. Heat is the main use of gas but it can also be used for stoves, hot water heaters, and dryers.
- Water/Sewer – flows through all of the pipes and provides us with such amenities as showers, dishwasher, as well as keeping us and our houseplants alive. The sewer lines are hooked up to the the toilets, sometimes water and sewer are on one bill, sometimes they are separate.
- Trash – all the things we do not want, can be in individual bins, set out on the street, or in common dumpsters.
- Lawns/Landscaping – makes the exterior look presentable. Lawns need to be cut and bushes need to be trimmed
- Snow removal – ice and snow need to be removed and/or salted so that they do not cause a slipping hazard for people and cars.
So who is paying for this? Is it all the tenants? All the landlord? It depends and it is very important to know who pays for each of the above before putting a property under contract.
The chart below shows the most common setup, depending on the building age and size.
Few Hot Tips from Lutz Sales + Investments:
- Water costs really vary depending on location of the building, we want to know those costs prior to putting building under contract. Jackson County, MO has very expensive water due to infrastructure upgrade costs while Johnson County, KS has very inexpensive water. This is why you work with a market expert!
- Usually if the landlord pays for water/trash you can tack a utility fee on the rent of ~35/mo, tenants don’t seem to fight it. That helps offset landlord paid costs.
- Electric heat is more expensive than gas heat, that is why gas is used for furnaces. Your tenants will like the cost of gas heat better than the cost of electric heat, so consider this when rehabbing.
- All electric buildings often have lower insurance premiums but the power is more expensive for the tenants
