I had a sewer line collapse at my rental. The city came out and said it isn't city responsibility. Insurance came out and said it isn't covered. Plumbing company doesn't have a payment plan. All in they want $20k that I don't have. I've had this rental for 10 years and never had a massive repair like this. Do I have any other options that maybe I don't know about?
Get other estimates . I have dug many a sewer line . Unless its a 15 ft or deeper dig or road repairs , thats a high price ( based on Maryland ) . Back 20 years ago doing new construction we could knock out 3 connections a day . At that number we could have retired after 2 years
Find the collapsed section and start digging. It aint rocket science. If you're really determined not to get dirty, then get 6 quotes. You'll learn a lot from each quote, and maybe find the best affordable solution. Forget your 20k guy, he saw you coming. More details please. Is it in the street, under sidewalk, or on the property? Where? length of damage? how deep? What does collapse mean? Pipe sank? Or pipe caved in? What kind of pipe?
@Chris Seveney - I'm cashflowing with the property at 3%. I would be -$600 a month if I refi to 7.7%. My tenants just renewed their year lease. I wouldn't be able to sell until their lease is up, correct?
You can sell w/tenants in place but that's at least a 45 day process and nobody is going to be able to get a loan if the lender knows that the line is collapsed. They'll make it conditional on it being repaired. Selling isn't really an option here.
Ask your grandpa for the money.
Ask your father for the money.
Ask your sister for the money.
Make sure you have a schedule to pay it back and then make sure it gets paid back on time.
Good Luck!
Now is not the time to be asking those people...terrible advice imo.
I would get at least 3 estimates and I don't know your market, but I would think one of the plumbing companies would have access to give you financing.
@Corbin H. my last sewer line replacement was $5,000.
Go out in the street and see if there has been any road repair work done like a patch of some sort. I had sewer backing up into a basement and sure enough the city had done work with heavy equipment and crushed the old tile line. When that was pointed out to them they dugit up and fixed it. That was $500 to Sewer Rats, no scope, nothing but knowledge.
I'd first confirm the extent of the damage. It's rare that an entire line would collapse, so have someone identify where the problem begins. Make sure the equipment being used has a camera at the end of a snake-like cable which can be tracked by someone at ground level. That will locate and document the nature of the problem, as well as letting you know how deep it is. Hopefully it's out from under the foundation and beyond any porch or landscaping outside the building - and it isn't under a driveway.
Next hire someone to repair just that section. You should save money to replace the entire sanitary lead, but solve the immediate problem first. In most municipalities I've worked, you don't need a licensed plumber to repair a sanitary lead - but the contractor should be bonded and insured. Get a fixed price - not a quote for time and materials.
Don't just run with the first quote you get. Make yourself comfortable with both the contractor's ability and with their price. If you aren't comfortable talking to contractors, find a buddy that will join with you in that conversation - but be part of the discussion yourself.
IMHO, $20,000 for the job as described would be great - if the contractor was quoting a price to the Department of Defense :)
Note that if the sanitary sewer is on the other side of the street (and your sanitary lead is broken under the street), that's a different conversation.
Best of luck!
Rent an excavator for $300 and start digging. They aren't that hard to learn. If that is not an option find a guy with one and pay him to do all the digging. It should be under $1000. Then have a plumbing company come to connect the pipe. Make them give you an hourly price in my area it's about $150-$200 per hour. For $20K that comes to about 200 hours of labor a month of non stop work. They are totally trying to rip you off because it's a "big job" and no one wants to do this their selves.
Also, check out lightstream, similar. They close loans fast.
UPDATE on this post:
I greatly appreciate all the responses, DMs, and advice.
Steep learning curve in real estate to follow.
Overall Price:
I should have clarified the work is $18k for the sewer hookup on top of $4k I had already paid to dig up the line. The other $2K was for having to put the tenants up in accommodations and covering the lost rent. These numbers have fluctuated as the project goes on.
Sewer Work:
I am working to get another 3 quotes on the work. The work goes off my property line to the alleyway behind the house which is gravel/dirt. There is a 3 foot drop from my yard down to the hookup. They are saying an 8ft pipe is what needs to be installed. It was already dug up as part of the work I've paid for. So now that price comes down the $4k I've already paid.
Home Equity:
For all those that want to know where the equity went. I was living at this property and renting out rooms. In 2020 I refinanced and used that as a downpayment on my second rental, which I'm living in now.
Reserve/CapEX:
For those that want to know about my reserves for capex. I keep $10K on hand, as I have never had an issue larger than that that wasn't covered by insurance. I'm currently renovating my second property and have most of my credit tied up in those renovations.
Property Management:
I have a property management company that has been difficult to get updates from. So I went out to the property this weekend to get eyes on the property as they told me the tenants are not at the property. Turns out the property is in way worse condition than the "great condition" walk through reports I was getting. Weeds were 3 feet high, fences and railings falling over, wood rotting out, roof with moss peeling back the roof to allow in water. Also, the tenants happened to be there when I got there. Speaking to them was incredibly eye-opening. They told me about having such a hard time getting in touch with the property manager than unless something was truly broken, they didn't bother with a work order. Which leads me to believe there may have been early warning signs they just didn't report. They took me around the property and showed me all the things they are fixing because they can't get in touch with anyone. I even noticed the tenants had affixed some kind of bird cage to the outside of the home to allow an animal to go in and out of the home. There's easily another $10k worth of work needed on the outside without me even going inside the home.
I followed up with the property management regional manager who was blown away any of this could be true. She took immediate action in less than an hour I had a response and movement from the property manager themselves. They admitted they only go to the property once a year. They are sending someone out to look at the property this week. The damages/wear on the house is more than one years' worth.
With the initial drop in cost from the work and insurance to cover my lost rent I should be in much better condition as far as financing goes.
Questions for the group:
Am I incredibly naive and should have been spot checking my property manager?
Am I exposed to any legal recourse from tenants with the quality of the living conditions?
How do others account for capex like this? It seemed to be the perfect storm where no one else was responsible (insurance, tenants, city).
Any other advice?
Big plumbing companies will rip you off. I find people off fb real estate construction pages and have replaced many sewer lines deep. The most I’ve ever paid was 3k. And that was a 50’ line from the house to the city sewer line at the street.
I use 0% interest for a year credit cards all the time for things like this. Citi offers up to 25k at 0% interest. Just make sure you pay it back within a year! Capital one offers this too. I’ve also done five 401k loans for up to 50k. Do you have a 401k?
Questions for the group:
Am I incredibly naive and should have been spot checking my property manager?
Am I exposed to any legal recourse from tenants with the quality of the living conditions?
How do others account for capex like this? It seemed to be the perfect storm where no one else was responsible (insurance, tenants, city).
Any other advice?
Truthfully, I wish i could say all this is "incredibly naive" but in fact it's all too common "naive". So, I wage the finger that yeah, ya gotta manage the managers and confirm, Confirm, CONFIRM. But I give you a BIG kudos on recognizing this, owning it, and dedication to learning, failing-UP as we say.
That is all too rare a virtue, and hold fast to it as it will serve you very well. To take measure of self, to learn and improve from "education via pain".
You may hold some recourse exposure, but all but certain this PM does too. If things are really on this extensive a level, I would be having a sit down with my R.E. attorney just to review things and get his input. He may say learn from it and move on, he may just as equally say "those SOB's, were gonna nail em to the wallz!". Your story sounds to have a fair level of negligence, and depending on your contract, oh-yeah, there could be accountability there.
For capex it's knowns. A roof, furnace, stove, washer/dryer etc.. These things have life spans, so it's a simple accounting action. How old are they/how much life-span is left, what's replacement costs for that today, then forward cast it, take into account inflation to such costs, now you have your total and a date. You divide that by how much time is left between now and then, also accounting for vacancy %. Nobody has 100% tenancy for years on end, not normally. So if your monthly allocation is on 12 monthly revenues from tenant's and you only get 10 on average, you'll be short.
This sewer line issue is not capex, it's contingency. That's the difference. Capex is for known-unknowns. You know a stove will go out eventually, you know the estimated price, you know the estimated date, you don't know exactly when.
A sewer line collapse is often an unknown-unknown. There is no way of foretelling, hence contingency funds.
Rent an excavator for $300 and start digging. They aren't that hard to learn. If that is not an option find a guy with one and pay him to do all the digging. It should be under $1000. Then have a plumbing company come to connect the pipe. Make them give you an hourly price in my area it's about $150-$200 per hour. For $20K that comes to about 200 hours of labor a month of non stop work. They are totally trying to rip you off because it's a "big job" and no one wants to do this their selves.