I’m looking at a 5 unit property and the water bill is $415, $373, $90, $422, and $515 every 3 months since 01/2019 WTF?! do u think there’s a broken pipe or something? And the light bill(common area) double from $80 to $165 i don’t understand
What were you expecting? $500/3mo ($100/unit) is expected in Dayton. I assume these are 1 bedrooms? Not that it matters, but it includes trash and sewer as well. The average across Dayton for the total bill is about $180 per quarter per household.
For the electricity, I wonder if there was a vacancy during the increase? It is hard to say without more info on what is on the circuit. What are the rents?
Have you checked Property taxes yet? That is really important and can vary widely. How much are the rents? There are some great deals on small Multifamily in Dayton but there are many “deals” that are far from a real deal.
Rents are $2800/mo in total 5 units 2 bed/1 bath. Why would a vacancy cause an increase? Property taxes was $2000/yr asking 150k @Dave DeMarinis
Looking at the rents minus expenses it’s cash flowing $1000/year smh @Dave DeMarinis
@Richard Whitaker your taxes will likely increase to about $5000 if this is in Dayton city. That is a deal killer, if it isn’t already dead.
If those are market rents, I wouldn’t take the property for free.
I assume you were looking at a financial statement vs. the actual bills. In that case, during vacant months, the landlord will pay electricity (and gas), otherwise you risk freezing pipes. If you were looking at actual electric bills, then I would find out what is on that circuit? A tenant may have found some common area plug outlets.
True story, when I took over a disaster project and started stabilizing it, we kept finding a window open in a vacant unit (1 of about 35 vacant units!) we finally caught one of the tenants coming out of the unit. He was charging his cell phone since the electric was shutoff for non-payment at his unit.
Why do you think the taxes will double and go all the way up to $5,000 ? @Dave DeMarinis
If you pay $150K for the property, you will get reassessed. In Dayton, you can challenge the assessments and if you are buying under market and very aggressive (paying an attorney to challenge assessments every year) - you will probably pay about 15% of your rent collection in property taxes. Obviously that number will vary heavily because it depends on your rent to sales ratio, your cost to market on acquisition, etc. so there is a wide variability but it is more variable on the high side unfortunately. 3.5% of your purchase prices is another decent rule of thumb.
Taxes in Dayton are unfortunately tricky, but these are decent rules of thumb for planning.
@Dave DeMarinis I have been looking at properties in the Dayton area and I have seen rates as high as 6% of purchase price but most are in the 3-4% range.