How much to factor in for these expenses

Question

Evaluating a triplex in NJ.  The property has separate gas heaters and electric meters.  In the description it mentions that "landlord pays water, hot water, and common area electric." &  "tenant is responsible for heat, electric and sewer bills"

For the heating and cooling information it mentions that the property has oil hot water, gas heating, forced air heating, and zoned heat.  Property is over 100 years old.

Given that this property has oil hot water how much should I factor into my cash flow numbers for water, hot water, and common area electric?

My preliminary numbers are $75 (per unit) for all water and $30 a month for common area electric.

What do you guys and gals think?

Jeff Kehl · Answer

@Rob  Randle, that is a very hard question to answer. The cost of water and electricity varies drastically around the country depending on the area and provider. I grew up in the Midwest and thought water was basically free until I moved to California and saw the amounts they pay out there.

Your best bet is to get actual copies of the historical utility bills. You may be able to get them now from the seller's agent or by just calling whatever provider they use. You'll probably need the meter number for the common area electric. But if not you should make sure to put a contingency in any offer that you be provided the historic bills so you can back out if they are way more than you expected.

One thing I've found is that landlord provided utilities tend to be a signal to tenants to use a lot of whatever you provide.

Rob Randle · Answer

Its $6,000 to convert oil hot water to gas I had previously called a contractor about that expense.  But the tanks are definitely a concern I just want to be fairly accurate with my cash flow numbers.

Kenneth B. · Answer

Hello Rob, I cannot give any thoughts on what to budget for common areas. I find it strange that it's oil hot water but gas heat. It may be more efficient to run everything on gas and eliminate the oil all together.

Also, be sure the oil tank is not below ground, or that there aren't any abandoned tanks below ground.