Why Utilities Show Up On The T12?
Jul 07, 2019
Tenants pay utilities so why does the electricity show up on the T12 (Trailing 12)? Charles also discusses"tenant paid property" vs an "all bills property".
Tenants pay utilities so why does the electricity and other things show up on the T12?
In other words, why is the property paying the electric bill if the tenants pay the electricity? Well, for a lot of reasons. When you own property as a landlord, you're going to have your own meter for the parking lot lights, the stairwell lights, the common area lights, the office lights.
And then the other thing too, is you're always going to have the meter for the vacant units. You got to keep the electricity on in the vacant units since you got to turn the lights on when people walked in. And that's the landlord rate or a lot less expensive. Typically what most utilities do is they give the landlords a special rate for those vacant units.
Apart from that, always remember that the water and the sewer are always the responsibility of the landlord. I don't mean that the landlord has to pay for it. You can always bill back for it. But the water and sewer bills are going to come to the main office and you're going to pay that as the landlord. Same goes with the trash. It is always or usually the responsibility of the landlord.
You can get creative with the billing and charge back for some of this stuff. If you look at Class A property, the water, sewer and the trash are paid for by the landlord. And everything else is paid for by the tenants.
Just keep in mind, and this is where I think people kind of get mixed up with the naming conventions, that even with the landlord paying the trash, the water and the sewer, the tenants are paying the gas and or the electricity bill. We call it a "Tenant-Paid property as opposed to an All-bills property.
In that way, we don't have to pay that heating bill in the winter and the air conditioning electricity bill in the summer. All right?
When the tenants are paying those things out of their own pocket, it is a Tenant-Paid property. It does not mean that there are going to be other utilities that the landlord is not responsible for. You can always go back and bill back these guys.