Should You Include Utilities with Rent: Pros & Cons

Life is full of bundled services. From cable with your internet to extra whipped cream on your mocha, it’s often easier and more straightforward when we get multiple things we want in one neat package. With that kind of thinking, including utilities with the rent might seem like a no-brainer. And in some cases, it is. But as with anything in property management, there are pros and cons to keep in mind. 

The Benefits of Including Utilities In Rent

There are pretty compelling reasons why bundling utility costs with the rent can benefit both you and your tenants. It makes things easy for your renters, and it can even result in some financial bonuses for property owners.

Keep It Simple

One of the primary benefits of bundling utilities with your rent costs is the simplicity for your tenants. Everyone has bills to keep track of. And most of us would be more than happy to worry about a few less of them. When a prospective tenant sees that the total rent includes utilities, they know they’ll easily be able to calculate their monthly living expenses and not have to worry about making additional payments themselves. 

Straightforward Marketing

It’s frustrating to find a rental that seems like a dream come true, only to get to the fine print and discover the hefty price tag at the top of the listing isn’t accurate. Between paid parking spaces, pet rent, additional fees, and utilities, the actual monthly cost of a rental can quickly add up. Sometimes the irritation of considering a new set of extra charges on top of the monthly rent can sour a prospective tenant’s interest. With utilities included, you can provide a simple number that renters don’t think twice about when deciding to apply.

Financial Benefits

Money is always a great incentive. And in this case, you as the landlord can benefit from paying your tenants’ utilities. If you have a credit card with cash back rewards, putting utilities on your card can rack up a sweet payout. Just make sure to check that there’s no additional fee incurred with your utility company for using a card. In addition, if covering your utilities is considered a necessary business expense, the cost is tax-deductible. 

The Drawbacks of Including Utilities

As with most things in life, there are also several downsides to including your tenants’ utilities in the rent. Because it’s hard to know how your tenants will use their utilities, the uncertainty is high on the list. 

A Higher Listing Price

One of the main disadvantages of covering utilities in rent comes down to marketing. When you include utilities in the rent, you will want to set the rent higher to reflect that. However, for people browsing rental websites, a slightly higher rent might be enough to eliminate your home from consideration. 

Fluctuating Costs

While tenants might appreciate having a consistent sum for their monthly utilities, the burden of increased usage falls to you. Winter inevitably drives up your tenants’ heating and lighting needs, which results in a higher gas and electric bill. If you price your rent too low, heavy utility usage can make a severe dent in your profit margins. Your tenants might also be less likely to conserve their usage when they’re not the ones paying, resulting in a higher bill for you. 

Financial Responsibility

When you pay for your tenants’ utilities, you’re on the hook for them whether your tenants pay your rent on time or not. The financial risk of that scenario has been abundantly clear during the COVID-19 pandemic when many tenants were unable to pay their rent for months at a time. If you’re covering your tenant’s utilities, you still have to pay for them even when you’re not getting that money from your tenants. 

Bundling Utilities With Rent: Is It Worth It?

There are many good reasons to include utilities with rent, just like there are plenty of reasons not to. In the end, it comes down to what you prioritize. If you want to make things easier for your tenants and make a little extra cash from tax deductions and credit card rewards, you might benefit from including utilities. On the other hand, if you want to protect yourself from the financial burden of unexpectedly high utility bills or tenants who can’t pay their rent on time, consider having your tenants pay their utilities. 

Here are a few important things to remember. You cannot charge higher utilities based on the number of people in a rental due to anti-discrimination laws protecting large families. You also cannot ever turn off utilities under any circumstances. Lastly, your rentals must be able to maintain a temperature of at least 65 degrees. So factor that in if you live in a location with frequently colder temperatures. 

A Property Management Company Streamlines Your Business

With so many factors to consider, seemingly simple decisions like this can quickly become overcomplicated. That’s why many landlords have started turning to property management companies like Rent Portland Homes by Darla Andrew to keep things running smoothly. With our long-running experience in the Portland rental market, we can make sure your rental is run at peak efficiency. 

After signing on with us, we conduct a preliminary property analysis to determine any essential repairs or maintenance and start getting a feel for your rental’s price point. Once our maintenance and repair teams have spruced up your property, we take extensive photos and videos of your rental so that prospective tenants can see all its best attributes (or even take a video tour). Our marketing expertise makes extended vacancies between tenants a thing of the past. 

You’ll never need to worry about whether you’re getting a better deal to bundle your utilities or not while we’re handling all the details. We even handle all the communications with your tenants, including collecting rent. All in all, Rent Portland Homes by Darla Andrew strives to make your Portland rental shine. For more information, call or text us today at (503) 515-3170 or fill out the contact form on our website.