Question ... has anyone any experience with septic issues with apartment buildings? I am considering a property that has great numbers, but the 4 building complex has septic issues like: drain-field, "bubbling" due to renters putting "6-7 people" in the apartments, etc. I am going to see it this weekend, but would love to hear thoughts so I can prepare.
I am going to research if I can put on city water, but not sure if that is viable yet. The current solution to the issues is pump a few times a year and remove the washer/dryers from all units it appears.
@Michael Hutchinson - not with apartment complexes, but in general, yes! The size of the septic tank and drain fields are usually designed per # of bedrooms & baths as an assumed # of occupants are allowed. Sounds like a management issue :)
In general, septic tanks last 30-40 years before having to be replaced, need to be pumped every 5-7 years, and most people use the same septic company for pumping. The septic company should have a record of how often and when the last pumps and the health dept should have record of when it was installed.
Septic systems are great if used properly, but when renters do what renters do, it can really screw things up.
I've had substantial issues with septic systems in apartment complexes - it's not a deal killer, but it's definitely a negotiating point. Run your numbers based on the cost to connect to a municipal sewer.
Pulling out all the laundry facilities will likely have a negative effect on your tenancy.
Thanks Guys ... this helped a great deal. Looks like the property can't do much to fix the septic. The land is smaller and the local regulations changed where they had to move the septic from the back of the property to the front due to a creek. They filled up the yard with the drain field and there is no room left.
It is poorly managed, so it has upside in the numbers. However the real dollars won't come until city sewer comes in which could be 5 years. Debating the deal now ... thanks so much for the help!
if there is water bubbling up , the ground isnt perking enough to accept the discharge . If its that small of a property , you could be looking at BIG $$$$$$$
Sounds like a deal I would run away from. Backed up drain systems are a nightmare for tenants and the landlord. There are better deals out there.
check to see if you have enough land for expansion. You are going to have to remove people in units, overcrowding does strain the system. I would perform a test during due diligence to see if it is working properly, and if it isn't calculate the cost to repair and demand as a credit at closing.
Make sure you build in the cost of pumping. One tell tale sign that the system is not working is if the owner is pumping on a regular basis.
Do not be scared off just because of a septic system. it may be beneficial to hook up to the sewer line, but bring out a contractor to estimate the cost
The septic system is failing. I bought a house with a similar situation - they build a 4br on a 3br system. We have to replace all the lines in a repair field. If you do not have enough space for a repair field you could ask a neighbor for an easement.
Do resolve this and get a permit while under contract. Not after you buy it. I wouldn’t buy it if I can’t repair the septic
@Michael Hutchinson Without previous experience dealing with septic issues and potentially inheriting large capital, I would pass on this opportunity. I would file city sewer in 5 years under speculation - who knows how long it will take the city?
Thanks all! Great info. As an update, I am likely going to get the properties and will be in due diligence this week. I am happy to update the group. However, here is what I have learned on it now:
- After speaking with Health Department and Soil Engineers, it looks like I can keep the septic issues to just maintenance. I will have to simply invest in the property when rehabbing to low flow toilets, showers, dishwashers and it should be good. I will monitor the progress and see if I can later add back in washer/dryer. To do that, I might have to get an easement on a parcel across the street and/or change out the pumps at about $30k a unit (4 units) ... not sure it will be worth the cost, but we will see later as it is very profitable with washer/dryer it appears.
- Septic tank and pumps are under 7 years old, with a 25 year life. The issue is really the design + land available for drain-field + inefficiencies in the units.
- Because of issues, seller will move on the price. This will put my debt service coverage ration at about 1.8, with a requirement of 1.2 by the bank. It will also mean that my ROE should be greater than 28% with a B/E of under 5 years.
It is a project for sure, but assuming I get the load right with construction cost built in it looks like a good project. Will post again in a few months with a status.
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