The One "Utility" You Want To Pay Yourself

If your properties are in communities where the government provides garbage pickup (and therefore you pay for it through your property taxes), or you're only dealing with complexes where you already provide dumpsters for the tenants, then you can skip this post. However, if you are like me and have properties like houses and duplexes where people pay for a garbage service, you need to keep reading.

In general, you want to avoid properties where the landlord pays the utilities - energy and water costs are probably going to be rising faster than general inflation for some time to come, and when you're paying the utility cost your tenants are going to never even think about conserving. In the case of garbage pickup, though, you should pay it. We pay it and then have the tenant agree in the lease to add an amount to what they pay each month to reimburse us. Why do this?

You know there is actually garbage pickup. Sure, leases require tenants to have garbage pickup, but you will be surprised at how many tenants won't get it. They will try to pawn their garbage off at work, or in random dumpsters, or worse let it pile up. Most cities in which the government doesn't handle trash have laws requiring residents to have (pay for) garbage pickup. Eventually the cities figure out that tenants won't do this, and will change the laws to require the property owner to make sure there is garbage pickup. They realize that a tenant who doesn't have the wherewithal to pay for garbage pickup is going to be difficult to levy and collect fines against, but you - the property owner - can't hide. They'll put a lien on your property if nothing else. So, are you willing to risk fines and more, trusting that your tenants will pay their garbage bill? That's not a bet I want to take.

In my town, in fact just down the street, there was a small fire in a rental house last week. According to the paper, "I've never walked into anything like that," said one captain with the police department. Just what had he walked into? "Garbage," said the deputy fire chief, "Floor to ceiling, 20 foot wide, 16 feet deep - garbage."

The mayor was called in, and ordered the garbage removed by a hazmat team. The tenant admitted to not paying her garbage bill for over a year.

The kicker, though, is a paragraph further into the story: "The bill for the cleanup, which took about five hours with heavy equipment, will be charged to the owner of the property..." and then they published his name. The tenant was the one who broke the law (and likely the lease) by not paying for garbage pickup, the tenant was the one who piled garbage until it completely filled the house, but the owner is going to be stuck with the bill - which you can figure will be enormous. The city government isn't dumb; they know there is little chance they would be able to collect anything from the tenant, so they go after the owner.

While not experiencing anything this bad, we had seen a pattern with tenants not paying their garbage bills, especially, of course, the ones who end up skipping out on rent. So naturally they left quite a bit of trash for us to deal with, which we couldn't always get to right away because it can take a week or two to get a herbie delivered and pickup service started. Several years ago we decided that paying the garbage and getting the tenants to pay us was the way to go, and haven't regretted it at all. It puts us on very good terms with the garbage company and the city as well.

There's also a lesson here in doing periodic inspections, but that's a topic for another day.