Minneapolis, St. Paul, MN Utilities

14 Replies

Hello everyone,

I looked at a 2700 sq. ft. property today and I need some advice on utilities. I'm trying to break down expenses to get an idea of cash flow every month. Currently the building is vacant. It has 8 units 4-1bd, 2-2bd, 2-3bd all 1 bath. The heat is natural gas with the old style hydronic radiators. I can't remember if the water heater is natural gas or electric. I'm new at investment properties and was trying to take in as much as I could on the extensive remodel. Currently there is only 1 meter for the whole building. I'm looking at general utility costs for this size building in our area. Also, is there any way to seperate the meters? If so the common areas would be 3 flights of stairs and a laundry room in the below ground basement area. 

Any help is appreciative

What year was it built?  In all likelihood, there is no way to separate out the heat.  Laundry room would have to be on the landlord's meters no mater what based on Minnesota co mingling statutes.

I think you mis typed it's impossible that the sq footage is 2700 when you list the units and how many bedrooms.  Taking out for minimal common stairs-that would put each unit at 300 sq ft.  I'm guessing it's double or triple that sq footage.

Hi Victor, First off, are you sure that it is 2700 sq ft? That sounds awfully small for an 8-plex. Another question I have is whether each unit has its own boiler. If it does then you could separate out each unit and put the cost on the tenants. If all the units are heated from one boiler the strategy wouldn't work. Hope that helps! Dan

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I'm not positive as I haven't taken measurements. Walking through it today it seemed bigger than that. Unfortunately no there is only one boiler.

The home was built in 1890. Most if not all of the electrical has been upgraded to today's standards but wondering the best way to either separate the utilities or figure the cost. Update the correct sq ft is 10,592.

Average water bill for a duplex in South Minneapolis is $150-$175/month. For 8 units, I'm not sure but could be near $600/month or higher. I don't think you can get water separated. Gas on the other hand, you might be able to - if it only has 1 gas meter, but it'll be expensive to do.  One boiler means you'll be responsible for heating bill as well... 

@Victor Lebegue   There is some good news.  You can charge each unit for their "apportioned" use of your heat.  Here is the law on the issue, you will need to be able to follow everything in subsection 2 so you may need to wait until you have utility history, but at least you have a future plan:

504B.215 BILLING; LOSS OF SERVICES.

Subdivision 1.Definitions.

For the purposes of this section, "single-metered residential building" means a multiunit rental building with one or more separate residential living units where the utility service measured through a single meter provides service to an individual unit and to all or parts of common areas or other units.

Subd. 2.Single-meter utility service payments.

Except as provided in subdivision 3, the landlord of a single-metered residential building shall be the bill payer responsible, and shall be the customer of record contracting with the utility for utility services. The landlord must advise the utility provider that the utility services apply to a single-metered residential building. A failure by the landlord to comply with this subdivision is a violation of sections 504B.161, subdivision 1, clause (1), and 504B.221. This subdivision may not be waived by contract or otherwise. This subdivision does not require a landlord to contract and pay for utility service provided to each residential unit through a separate meter which accurately measures that unit's use only. This subdivision does not prohibit a landlord from apportioning utility service payments among residential units and either including utility costs in a unit's rent or billing for utility charges separate from rent.

Subd. 2a.Conditions of separate utility billing to tenant in single-meter buildings.

(a) A landlord of a single-metered residential building who bills for utility charges separate from the rent:

(1) must provide prospective tenants notice of the total utility cost for the building for each month of the most recent calendar year;

(2) must predetermine and put in writing for all leases an equitable method of apportionment and the frequency of billing by the landlord;

(3) must include in the lease a provision that, upon a tenant's request, the landlord must provide a copy of the actual utility bill for the building along with each apportioned utility bill. Upon a tenant's request, a landlord must also provide past copies of actual utility bills for any period of the tenancy for which the tenant received an apportioned utility bill. Past copies of utility bills must be provided for the preceding two years or from the time the current landlord acquired the building, whichever is most recent; and

(4) may, if the landlord and tenant agree, provide tenants with a lease term of one year or more the option to pay those bills under an annualized budget plan providing for level monthly payments based on a good faith estimate of the annual bill.

(b) By September 30 of each year, a landlord of a single-metered residential building who bills for gas and electric utility charges separate from rent must inform tenants in writing of the possible availability of energy assistance from the Low Income Home Energy Assistance Program. The information must contain the toll-free telephone number of the administering agency.

Cheers,

~Tim

Use address contact Centerpoint Energy for previous cost and use on Gas,  and City for report on previous use for water.. you should be able to get like the last 3 years of billing to see what costs were. If not separate for electric also contact Xcel for electric costs

Have a boiler company inspect boiler before you buy.. make sure it's running and all radiator are functioning properly. or baseboard what ever type it has.

From the costs you should be able to gather the average for utility costs,, if it were me I'd average it out and check what is expected for utility cost increases,, google that.. and you'll have what you need to be able to add the costs to the rent base..

Not such a bad thing ,, we operated a 6 plex , a 5 plex and all utilizes were included in rent.. we kept boiler at set temp all winter, had boiler guy set up a thermostat we controlled.. in boiler room only we had access to.

Just realize all HUGE buildings like 12 units to 100 units rarely have separate meters for anything,, owners pay heat, water and electric.. so it can be done.. 

One thing to watch and inspect apartments for is water leaks,, and you'll pay close attention to meter for that.. we'd inspect early like 5 am,, to see if meter dial was steady,, no leaks in not we'd post call us if you have a leak,, otherwise we'd inspect and figure things out for ourselves. 

Thanks Tim! Good read. 

I thought utility companies no longer give out that info at least when I bought my house they said it was confidential. I will definitely have the property inspected but luckily almost all the boiler and water piping is in good shape. Thank you for the tip. I will try calling around and see what info I can get.

Hi @Victor Lebegue , I received your email.  I agree with the above comments but also want to add that it MAY be possible to add water meters to each unit but it would depend how the plumbing was setup.  I would 2nd calling the utilities companies to see what you can figure out.  

If you want someone to take a stab at estimating utilities costs you will have to let us know the city you are looking in if you are OK giving that up.  Up in my area there are a couple different utility companies and if you are on the crappy one you can expect to pay $100 per month more for a single family, quite a bit more for multi-family.

I will respond to your email separately in regards to the reno costs, it will be later today or tonight though.

Thanks John. The city is St. Paul. I haven't gotten around to calling yet. The main issue is this is a Vacant building so even though the utilities are on there isnt much use of them and will still be difficult to gauge.

@Victor Lebegue understandable - by having you post the city I am thinking that someone on here may be able to give you estimates based off what they are paying for similar sized units.  

Well I'd appreciate the info for future use however I passed on the deal. Being the building was Vacant for a year Zoning laws changed and it can only be up to a 4 unit building now.

Originally posted by @Victor Lebegue :

Well I'd appreciate the info for future use however I passed on the deal. Being the building was Vacant for a year Zoning laws changed and it can only be up to a 4 unit building now.

Ouch - that would be a deal breaker. 

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