What are your thoughts? Looking at buying an upper/lower duplex and need some input
Here's the situation:
I'm looking at possibly purchasing another investment property. It's an upper/lower duplex. It's a big place, about 2,000 square feet. The lower unit is a 2BR 1 Bath and the upper is a 1BR 1 Bath.
Here are some things I like about the property:
`It's old, but in good shape. The siding was updated a few years ago and overall, it seems like it has been relatively well cared for.
`The price is quite good and the taxes are low. My total mortgage with taxes and insurance would be about $450 or so.
'The gross rents are $1050/month, so clearing $600/month would be great.
'It can be converted back to a single family home with very little to no work if it needs to be.
Here are some things I DO NOT like about the property:
`It's a conversion from a single family home. My other duplex is a true side-by-side duplex with garages separating the two units, which is a very nice feature. Most duplexes in my area are single family conversions because all of our new construction seems to take place in the country. I live in a pretty rural area.
`There is only one furnace that heats both units. I believe the thermostat for said furnace is in the lower unit, meaning they control the heat. I am going to look at the lower unit this afternoon and will confirm my suspicions then. This setup seems weird to me. I would imagine the best way to deal with this would be to program the thermostat for specific heats and not allow the tenant to control it, but maybe you guys have some better ideas.
`The landlord pays for natural gas, water and sewer. The tenants are responsible for their own electric costs, however. I live in an area where our winters are stupidly cold. Heat can get pretty pricey here. I estimate it will cost me $100/month in natural gas charges and likely $50-60 in water/sewer charges so my $600/month just went to $450 pretty quickly.
What are your general thoughts? I think my biggest hangup is in paying the utilities and there only being one furnace. Have any of you experienced this type of situation?
Thanks!
@David Krulac In that scenario, you won big time!
@Tom Meade You might be right. I never really thought about the rebate thing, so I will definitely look into that. Thanks for the input!
@Rebecca Dillon Hi Rebecca, thank you for the valuable input! What was the process of "closing the furnace off to the other units" Did you actually cut the ducts or just close the vents in the other units or how did that work? Thank you for the good advice!
I am not 100% sure what they did but they closed off the cold air returns and then it looks like they placed metal stops aka pieces of duct work inside the duct to stop heat from going into the other ones. I assume some heat will escape but it should be minimal. The vents are still in the floor with the grates so it did not change the look of anything.
Thank you
That's not the most correct way . The ducts to severed apt should be cut and capped with sheet metal at the plenum or trunk lines, those lines closest to the furnace. The metal patches should be secured with sheet metal screws and the edges sealed with duct tape or some other sealant so that the air does not leak out from the patches. Unless sealed air tight the ducts will leak heated air and waste energy, not very fair to the tenant now paying for their own heat and all that can leak out also.
Originally posted by @Drew MacDermott:
@Ethan Blue @Eric Yingling @Arthur Banks
Great information! You may have already found these in your research, but there are tamper-proof thermostat units that are hardwired to a range of approximately 68-72 degrees. Not even the manufacturer can change this range once the product has left the assembly line. I am looking into this product when I start investing. I am not affiliated with and have no financial ties to this company. I'm sure there are many other suppliers to purchase from. www.landlordstat.com/
Does anyone prefer certain thermostats over others? Have you found it to be helpful breifly counseling tenants in regard to heat before they move in?
As much as landlords want a tamper-proof thermostat to exist, the reality is that all thermostats are vulnerable to certain tenant practices; read below for more on that:
http://www.biggerpockets.com/forums/52/topics/39794-heating-season
http://www.biggerpockets.com/forums/52/topics/23979-cap-heat-in-mn-or-other-cold-winter-states-
http://www.biggerpockets.com/forums/12/topics/34037-heat-included-in-rent-new-york-state
http://www.biggerpockets.com/forums/52/topics/39174-landlord-controlled-thermostats
Yeah, when you drive past a block of rentals in the winter and you see windows open, you can bet the landlord is paying the heat there ...
I prefer tenants paying for their own heat and the simply round mechanical old school thermostats, cheapest to buy and less problems due to their simplicity. I've seen some of these that are 50 years old and still working just like the day they were new.