Los Angeles Income Property Utilities

When renting Condos and Single Family Homes landlords usually don’t pay for any of the utilities (except for condos, which the Landlord pays the HOA dues which cover some utilities)

For Residential Income Properties (2-4 units) and Apartment buildings (5U+) it’s a different story. Landlords usually pay at least a few of the utilities with these properties. Water + Trash are the most common utilities paid by the landlord since most income properties in Los Angeles are on a Master Water Meter and not separately metered. The cost to install a water submeter is quite prohibitive at about 20K, and water is cheap, so most landlords never bother to upgrade to separate water meters.

Advice from experience:  I recommend to put a stop service request on all utilities that are to be paid by the tenant prior to their move in. That way, you ensure that the utilities are put under the tenant’s name (at least if they want to use them) and you don’t have to pay for them.

Expert Tip: Most public utility companies have a “Landlord Account” you can set up. You should consider setting up a Landlord Account for all your investment properties. The two main utilities to set up landlord accounts in Los Angeles are Electricity and Gas. Landlord accounts save time and effort. When a tenant turns off their utility service, instead of disconnecting the Electricity or Gas, the service is left on and automatically transferred back to your landlord account- so you don’t have to start service again.

One last point I’d like to mention about utilities is that there is a lot of research that shows when a tenant pays their own utilities, they use about 20% less than when the landlord is pays for them. So if you can have the tenant pay for their own utilities that is always best.

Utilities Expenses:

WATER

ELECTRICITY & GAS

TRASH

SEWER

Water

Fresh Water is one of our planet’s most abundant resources. Los Angeles has low rainfall and has to import about 70% of the water it needs, so water here is more expensive than wetter parts of the country- even if water is cheap (750 Gallons public water is ~$5- a lot cheaper than at the supermarket!).

Most of the income properties in Los Angeles are on a master water meter. I think this is because water is very inexpensive and the cost to install a meter is cost prohibitive ($20,000). Since there are no separate water meters, landlords usually pay water.  

The average person uses 100-120 Gallons of water per day and about 36,000 gallons of water per year. I would estimate about $200-$300 a year per person for water cost. If you have a 2 Bedroom unit, assume 3 occupants 3X$250 = $750 water cost per year. For 1 person in a 1bedroom $250 per year.

Some typical things people use water for: Showers (15-30 Gallons), Cooking (2 Gallons), Laundry (15-30 gallons), Gardening (8.5 Gallons/100sqft), Dishwashers (10 gallons) Bathroom – Toilet and sink (10 Gallons). A Bath is about 36 gallons. Showers are 2 gallons a minute.

For properties that have extensive landscaping- especially grass, this can really skyrocket the water bill. Figure about $30/year per 100 SQFT of grass.

Los Angeles Water Companies? Beverly Hills Water covers BH and westhollywood??
DWP for LA

Electricity & Gas

Electricity and Gas are commonly separately metered in Los Angeles- so tenants almost always pay for their own electricity and gas. Landlords for 2-4 units usually don’t have common area electricity (Lights in the front, the parking garage, Laundry room, and hallways) or common area gas charges (shared boiler, or laundry room gas dryers for example) for smaller size buildings. Apartment building owners, on the other hands, will probably have some common area electricity and gas bills for larger properties.

Electricity can be quite expensive @ 12 cents per Kilowatt Hour. The average American houshold spends $1,200 a year on Electricity Bill or about $100/mo. Since people spend about 5x more on electricity than water- this is a much more desirable utility to separately meter- paying the 20k to install a separate meter can recoup investment on a 15 year timeline.

For electricity, I would just like to specifically mention HVAC- which can be a huge power sucker. Especially if the HVAC system is old and functioning with less effectiveness. If the property has common area cooling system that is going to affect utility cost a lot.

Trash

The City of Los Angeles provides collections services for Residential customers. Residential Service is for properties of (up to how many units?). The city only offers Trash bins, if you need a dumpster you will need to hire a commercial trash company and the cost is much higher (about +3K/mo per dumpter). 

Residential is Le expensive- for Single family dwellings it is $36/month or $432 a year. 

and for Duplexes and Multi-Family Dwellings $24/mo. per unit or  $288 per year per unit.

SEWER

Sewer is one of the little bills  $20/mo or $250 a year.

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