All homes have maintenance issues, even brick construction (as opposed to face brick). It might not be wise to pass up an otherwise "cherry" deal just because it's in a rural or unincorporated area and has well and/or septic.
Look at each deal as a whole, and let it stand or fall on its own financial merit rather than your personal prejudices or concerns. You'll find much greater profit and success that way.
Plainfield, IL · Member since 2016 · 139 posts · 53 votes
9y
@Vincent Parello One thing you have to consider in well water homes is the well water pump. Over time these pumps can burn out, especially if the tenant uses a high volume of water for an extended period of time. (Ex: Filling up a pool, running the hose for hours for gardening, etc.)
You do not have to pay for water bills for a well that is already established, but if you're talking SFRs, you shouldn't be paying for water as the landlord anyways. Pros and Cons wise, if you're not paying the water bill, I think normal municipality water is better, since you will not have to worry about the pump, septage tank, and well.
Residential Real Estate Broker · Hanover Park, IL · Member since 2015 · 20 posts · 2 votes
9y
I am guessing that would run in the tens of thousands of dollars. And I am guessing the savings on well water if any doesn't really cover the expense of a well water pump.
Plainfield, IL · Member since 2016 · 139 posts · 53 votes
9y
@Vincent Parello I have never had to replace a well, but it would run around $1,500, probably less if you shop around, looking at some quick google searches.
If you find a solid deal, I wouldn't let this hold you back. Well water pumps have a typical 10-15 year life, so I would just account for the pump in your Capital Expenditure savings.
Plainfield, IL · Member since 2016 · 139 posts · 53 votes
9y
@Vincent Parello That's interesting, because my girlfriend lives right off of 30 in Joliet (Crystal lawns neighborhood) and her house has well water. Let me know what questions you have, and if I don't know the answer, I could probably ask her father since they have lived in that house for 15+ years.
Investor · Germantown, WI · Member since 2012 · 206 posts · 364 votes
9y
I live in the Milwaukee metro area and we have a lot of houses on a well, my primary residence being one of them so here is my fairly well informed opinion on them.
Being on a well isn't a huge issue in it and of itself. The cost replace a well pump is usually around $1500 with labor and they have a life span of 10-20 years so it isn't a overly significant cost. The well pump isn't the only thing that can go wrong though. A well pump system also has a pressure tank (usually in the basement) which has pressure reliefs and cut off's that can fail. The tank itself can also fail and has a life span of 10-20 years also. The cost of a pressure tank replacement is usually $500-750. There also is a lateral supply pipe from the well to the house which can fail, this cost varies significantly based on the where the well is in relation to the house. The biggest concern with a well is that it can run dry or go bad in which case you have to either drill the well deeper or drill a new well. The cost of this can be vary from a few thousand to tens of thousands.
Like I said the well itself isn't a huge concern, and is something that can easily be accounted for in your capex calculations. The reason I won't purchase a rental property that is on a well is because in almost every case it also has a private septic system. This can be a major issue and come with significant costs. Private septic systems must be properly cared for. Of particular concern are famine products, condoms and plush toilet paper being flushed down the toilet. These can cause catastrophic failure of the leach field. Sending certain cleaning products and bleach down the drain can cause chemical imbalances in the septic tank that will also cause issues. If the leach field fails the system must be replaced entirely and because of new regulations this typically requires the installation of a mound system. This is assuming there is even enough land on the property to install a mound which has to be located in a different spot than the already failed leach field. A new mound usually costs around $15,000. If there isn't enough land then you must install a holding tank which must be pumped out usually every 2-3 months at a cost of $100-200. Speaking of pumping the tank even with a traditional or mound system most metropolitan municipalities require that it be pumped every 2 years at a cost of approximately $200-250. Passing this cost on to tenants would be difficult and generally unethical except in the case that they were in place during the entire 2 year period. It might be possible to prorate such an expense but would be much easier to pass this cost along in a slightly higher rent payment on the basis that there is no water/sewer bill.
For all these reasons I refuse to buy any rental property with a private well and septic. It won't command any higher rent but will significantly affect your capital expenditures. These added expense can be accounted for but that doesn't change the wild card of hoping your tenants don't ruin your leach field.
I invest in Joliet, Not to far from where you are looking. I had a nightmare with a well but it was an isolated area with very low water tables and the replacement cost was over 35K. Other quotes on here are probably closer to what is common if just replacing the pump and components. I had to have an entire new well dug over 750 ft deep. I would contact will county well and pump and have an inspection done. They are pretty knowledgable about the area and can let you know how much it might cost to update the pump and controllers and whether or not its necessary.
Real Estate Investor · Fenton, MI · Member since 2008 · 946 posts · 153 votes
9y
Dont buy it. I have 2 rentals on a well, so I now have added responsibility of water PROCUREMENT and water TREATMENT. I have a pump, tanks, and water softener. Any one of these can break, stop, leak etc at any time. Why put up with that added trouble? If a tenant has no water you have to fix it imediatly unlike minor issues. Let the city procure and treat the water. Since tenants don't have to pay for the water they just waste it. No more wells for me. DEFINITLY NEVER get a septic either.
Residential Real Estate Broker · Hanover Park, IL · Member since 2015 · 20 posts · 2 votes
9y
@Nicholas W. You basically answered all my questions with one post so I really appreciate that. I am working with an investor right now and one of our main concerns as far as criteria is if the property doesn't sell it will at least be good to rental. With this being his first deal and your input I think we are going to stay away from Well.
@Nathan Waters I knew there was some serious costs with well properties. Did you rent or Flip the property in Joliet? And do you still invest in the area?
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
9y
I have lived in a number of houses with wells. What type of well matters. Most wells are drilled as opposed to dug well that you find with older houses. Dug wells seem to have more water quality issues and you might need a purification system. The biggest risk is the well running dry, that can cost thousands (we had one go dry in NJ due to town blasting for sewers). They need to drill deeper or in another location. Like anything though it depends on your area the cost. A new well has a per foot cost for drilling and you don't know how many feet you need to go. The issue of water quality we haven't had but I did have a spring box house years ago (like a dug well) and that needed a UV system. Try www.privatewellclass.org for specific info on testing ect. We have a six unit on well and I try to be vigilant on leaks, we put a water meter in and it really helped with leak detection. It is important to consider the well demand at a given time. You really should consider high volume use restrictions like not filling swimming pools or car washing, hose running etc. Large parties (my sisters well ran dry with 100 people at a party at her house)... that was a temporary demand issue that resolved. Occupancy numbers can be an issue if you have low recharge rates.
Also consider if electric is out you have no water. We have a generator on the 6 unit but I don't think I would go to the generator option for a single family unless it was a more high end rental. If it is uncommon in your area probably not worth it. On the other hand no water bill.
Rental Property Investor · St Joseph, MI · Member since 2015 · 302 posts · 106 votes
9y
I still invest in the area and I still own the house as a rental. It was my first rental in Illinois and it was a big awakening. I am glad I learned so much from the entire process and with all costs, I am exceeding the 1% rule. Not hitting the 2% rule like I am with other properties, but its still cash flowing following the cash out refinance. My biggest lesson learned is to have a thorough well inspection done, quotes on repairing any issues, and factor it into the capital expenditures.
Investor · Lake Villa, IL · Member since 2014 · 90 posts · 48 votes
9y
I live in Chicagoland on well and septic. Other than the costs that others have mentioned it's not bad. Well pump, pressure tank, and filters/softeners as cap expenses. Around here iron and h2s is high.
But no water/sewer bills! That's a bonus.
Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
9y
Just wanted to put my $0.02 in here ...
All of the homes in the Joliet area are on well water, whether that be a private well or municipal well water. The area does NOT have Lake Michigan water to the best of my knowledge.
Some years back during a summer drought, the wells east of I-55 went dry except the deepest private wells.
I recently moved further west. One my choices was a house which is on municipal sewers but has a private well for water. Not sure how the city bills that.
All homes have maintenance issues, even brick construction (as opposed to face brick). It might not be wise to pass up an otherwise "cherry" deal just because it's in a rural or unincorporated area and has well and/or septic.
Look at each deal as a whole, and let it stand or fall on its own financial merit rather than your personal prejudices or concerns. You'll find much greater profit and success that way.
Joliet, IL · Member since 2015 · 52 posts · 12 votes
9y
Here's my $.02 (the wife) and recent personal experience (Aug 2016). We live in Joliet east side near Briggs not far from the race track. We have a well and not on septic... city sewer.
Pro
1. No water bill.
Con
1. Our water pump went out end of last summer... I think I left water hose running and it overtaxed the pump. It was only because of the size of the pump needed we had to pay approximately $2000 (may have been $2200) otherwise it would have been half that amount. It was only because of the specific pump needing to replace. (it was a certain size that was originally installed)
2. We have a project we will be working on that requires a new well and quotes are at approx. $8000 (without looking at the job) to $10,000-12000 (actually coming out to look at the job). This property is located Joliet west side... happens to be Will County unincorporated although address says Crest Hill.
Reminder: be diligent in remembering to turn off water. The pump can not run all night and day without giving out. Like a car if you race the accelerator all night it is bound to break something in the car.
Joliet, IL · Member since 2015 · 52 posts · 12 votes
9y
One more thing... I don't think #2 is a Con as it is informational pricing. And hopefully, if your project is to be tenant occupied... they turn off the water and not forgetting if they are gardening..
Real Estate Broker · MI · Member since 2014 · 594 posts · 183 votes
9y
I bought a short sale a in 2012. It's on well and septic. The house was built in the late mid 1990's. I purchased a home warranty that covers for any problems with the softener, well, and etc. I also have another layer of coverage via property insurance. I'm not scared of well or septic. Why? I factor those two items into my operating cost. It's the cost of doing business. That's my two cents. Best of luck!
I wanted to hear everyone's opinion on buying rentals on well water. Pros and cons?
I am in the Chicago land area so hopefully, I can get some input from local investors.
We considered purchasing properties in rural areas in the Carolina's & Texas that were on well water. During one of our property reviews the local realtor said that the land has stopped "percolating" I had no idea what that meant. He said- "The well has run dry" We decided for our business we would only purchase if city water was available. We have one exception though since we're still interested in mobile home parks.
All homes have maintenance issues, even brick construction (as opposed to face brick). It might not be wise to pass up an otherwise "cherry" deal just because it's in a rural or unincorporated area and has well and/or septic.
Look at each deal as a whole, and let it stand or fall on its own financial merit rather than your personal prejudices or concerns. You'll find much greater profit and success that way.
My $0.02 ...
This also gives you a one up on investors that are likely to pass up the opportunity. That's the situation I am looking at now with a multi unit on a well and septic. Gotta do my due diligence of coarse, but on an initial look, the numbers are looking good.
with the only bonus anyone has mentioned is no water bill I think I am going to stay away from well water homes.
I agree. The cons far outweigh the pros. Last year one of my houses on a well stopped pumping water and I had to respond immediately. A little bug had crawled into the switch and it shorted. That would never happen with city water. I surprised any landlord is supporting buying a house on s well. I have enough to worry about with roofs and furnaces.
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
9y
I have 4 houses on wells , not a big deal . None need conditioners . Water is great . I have had to replace 2 pumps . That wasnt bad ,a good pump was $ 500 and I pulled them myself . It took 2 hours . If the electric goes out the tenants have to deal with it .