Join Australia's most dynamic and respected property investment community

Furnished with Bills Included

Discussion in 'Innovative Techniques' started by Melbpositivegeared, 20th Mar, 2016.

  1. Melbpositivegeared

    Melbpositivegeared Well-Known Member

    Joined:
    23rd Jan, 2016
    Posts:
    80
    Location:
    Melbourne
    I'm doing a quick feaso on a large unit block of strata titled 1 bed apartments.
    This area seems to show potential for a demand in furnished with bills included leases.
    I do this already on one of my properties - however I've not explored this on 1 bedder units.
    Any advice on what I could expect bills to cost?
    It's already separately metred meaning I get to keep a close eye on my tenants habits.
    I believe the market will allow a $200pm premium to do so... What are your thoughts on actual expenses?
     
  2. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    13th Jun, 2015
    Posts:
    3,679
    Location:
    Perth
  3. Melbpositivegeared

    Melbpositivegeared Well-Known Member

    Joined:
    23rd Jan, 2016
    Posts:
    80
    Location:
    Melbourne
    It's $46 but when you X that by 9 units it's a lot. I'm curious what people's experience is with bills on a one bedder as I've only seen it on my 3 bedder.
    Not worried about the cost of furnishing- more the bills
     
  4. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    13th Jun, 2015
    Posts:
    3,679
    Location:
    Perth
    Appliances and air con weigh into the calculations a lot. I know if power was included in my rent I'd probably like to live at 24 degrees 365 days a year - the only thing that stops me using my air con is that I have to pay the power bill :)
    So in a 1 bedroom apartment you have 1 fridge, 1 air con, one HWS, 1 tv, 1 washing machine. This number of appliances is pretty much the same in a 2 or 3 bedder - the main difference would be in amount of water used between a 1 bedder and a 3 bedder.
    I would guestimate a 1 bedder would use half of what a 3 bedder uses, not a third.
     
  5. JohnPropChat

    JohnPropChat Well-Known Member

    Joined:
    10th Sep, 2015
    Posts:
    658
    Location:
    Perth
    Agree with Westminister. If you have 9 units you also have 9 times more bills unless you plan to have a large array of solar panels and a wind turbine :)
     
  6. melbournian

    melbournian Well-Known Member

    Joined:
    2nd Sep, 2015
    Posts:
    1,756
    Location:
    melbourne
    if it included bills i would leave heating and AC on whenever i am at home and have full bathtub soaks daily. i remember there were three 40+ degrees days in dec back to back to back. i left the AC on for like 12 hours a day coz it was unbearable. that itself would rack up the bills.
     
    Marg4000 likes this.
  7. Wall Street

    Wall Street Well-Known Member

    Joined:
    22nd Oct, 2015
    Posts:
    124
    Location:
    Melbourne
    Tried it - much more trouble than it was worth.

    Tenants used to leave the heater on permanently.Sometimes it got too hot, so they opened the windows for fresh air (heater still on). And one of them stole a couch. It was an old one.. but still?
     
    The Y-man and legallyblonde like this.
  8. Plutus

    Plutus Well-Known Member

    Joined:
    30th Jul, 2015
    Posts:
    272
    Location:
    The North
    I would treat it like a hotel.
    Arctic in summer, boiling in winter.
     
  9. Luke T

    Luke T Well-Known Member

    Joined:
    12th Dec, 2015
    Posts:
    216
    Location:
    Sydney
    From running holiday accomodation i have found yes people (most- not all)just think its free reign!
    I have had neighbors ring me up to tell me air con and all the heaters have been left on all day while the tennants are not even there (so its warm for the 10 mins it takes to heat the place when they arrive home !)It adds up really quickly unless you have full solar electric and no gas
     
  10. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    2,516
    Location:
    Sydney & Gold Coast
    Years ago I visited an acquaintance.

    Middle of winter.

    When I walked inside he had all 4 gas burners on his stove on full ball and the oven cranked - he wasn't cooking.

    I raised an eyebrow.

    He says "My utilities are included in rent".
     
  11. jodes

    jodes Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    139
    Location:
    Sydney
    We had airbnb guests for a month long stay. Space heaters. Got our electricity bill after their stay and our normal quarterly $180 electricity bill was $900 !! Can only imagine they left the space heaters on 24/7. Lesson learnt !!
     
  12. Azazel

    Azazel Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,113
    Location:
    Brisbane
    People tend to do it when there isn't separate meters.
    If they have separate meters, I wouldn't include utilities.
     
  13. NHG

    NHG Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    88
    Location:
    Sydney NSW
    I do it. Still working through logistics and legalities. I have it meet fire requirements for insurance purposes as I do it as room by room rental.

    Great returns if you do the numbers right. Doesn't work on many properties, though there are several profitable niches.

    Off the cuff I'm doubtful it will be viable in 1 bedroom places. Minimum profit per 2 bedroom apartment for me is $200/week after budgeted expenses of $150/week including paying off furniture over 2 years.

    Aircon can be a pain. Pull it out, give them fans.
     
    Last edited: 10th Feb, 2017
    Westminster and Perthguy like this.
  14. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    3,974
    Location:
    Sid en e - olympic city
    I would have expected it to be 200/week.....

    I too have been inside on many places where things are included, no one cares about anything.

    Not sure, but maybe you can limit usage costs.
     
  15. pjvdl

    pjvdl New Member

    Joined:
    1st Jul, 2015
    Posts:
    4
    Location:
    Adelaide
    I have been running share houses for a number of years. They are similar to what you are considering, except we do it by the room. We include all utilities, but have a "reasonable usage" policy in our leases to curb this type of behaviour. We pay the first part of the electricity bill per quarter. If it goes above this, then the tenants pay the extra. We set the level so that if they are reasonable with A/C and heating, they will never need to pay. This approach has worked for us.
     
  16. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    3,974
    Location:
    Sid en e - olympic city
    How can you do that in a shared arrangement ? How do you know whom to hit for extra ?

    I do not think you can use terms that do not define usage.
     
  17. Gockie

    Gockie Be the change you want to see in the world Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    6,527
    Location:
    Sydney
    I am going to do this as next priority. Smart aircon control.

    Air conditioner motion sensor controls,universal remote controls

    1. You can make the aircon say 18° but it really doesn't cool to that temperature, and you can also make it say 30° but it's really not that high.
    2. You can have sensors to detect if people are present and auto turn off if nobody's there
    3. You can also have it detect if windows or doors are open too....
     
  18. pjvdl

    pjvdl New Member

    Joined:
    1st Jul, 2015
    Posts:
    4
    Location:
    Adelaide
    You make a good point and we do only have a single meter. For this reason we clearly document in the lease that the electricity is a shared utility and is a shared responsibility. After all, they all use the common areas, etc. We are also very careful to explain all of this before they move in. We even go so far as to point out that it can go over if they are not careful with space heaters or A/C.

    We contribute the first $1200 per quarter. Anything over this is split equally between all tenants. If a tenant has only been in the house for a portion of the quarter, then their portion is pro-rata'd.

    We have been using the approach for many years and have generally had positive responses.