Newbie - unintentional First Deal - First issue - separate water?

3 Replies

I've been listening to BiggerPockets and reading info here for a couple months. I've been scoping out different neighborhoods within a certain radius from my house and watching the MLS listings - running theoretical numbers on properties to practice using different calcs to figure out what viable looks like. I even convinced my wife to look at a couple open houses. About a month ago she got a call from her dad saying that he's ready to move closer to us. My wife picks up one of my info sheets on a duplex and says "what about this one, for my dad?" So - fast forward a very quick month, it looks like we will be closing on our first deal early next year.

I know, I know - everyone says "NEVER FAMILY!!"  It seems actually to be a good compromise for us - I get in on my first real estate property and she gets a safe place for her dad that is subsidized by renting out the other unit.  AND we don't end up with her dad living with us! :)  

So here's my first major issue - The water is not separated by unit and there is only one water heater.  How do I divide this between the two units.  I thought about submetering but the piping is not set up to be two separate units.  What are my options? (other than including water in the rent)

Hello Ceril,

Contact the water company and get as much information from past bills as possible.  Make a decent assessment based on past trends on what the project or average usage should be.  Add that amount to what your were going to charge your dad for rent and don't charge him a water.  If you over charge him per your assessment give him and annual rent credit back, whatever you do don't underestimate and then go back to your dad and ask him to cover your water bill!

Remember don't add it in the rent, just account for it before deciding a rental rate.

Cercil,

I agree with Nate, but I would also keep the water issue in the back of your mind when your picking your new tenants. There will be a big difference in your bill based on the number of individuals using the water (single individual vs a couple, or vs a couple with kids). 

Sean

Realized that not only is the water not separate, but there is only one hot water heater (gas).

The upstairs unit is all electric (baseboard heat, electric stove, etc) and the downstairs unit has gas for the stove and furnace and the one hot water heater. I'm not sure how to divide that up. Doubt the downstairs tenant will want to pay for the gas to heat the upstairs tenants hot water!

I contacted a plumber to look at it I see how hard it would be to separate the water at least to be able to sub meter them but that doesn't solve the shared water heater so then I would have to add a 2nd electric water heater for the upstairs unit - thinking that this will be completely cost prohibitive.

Including utilities in the rent sounds like it could be very expensive over the long haul.

Any thoughts?

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