Some questions when looking at my first potential rental property

Some questions when looking at my first potential rental property

Carolina · Member since 2017 · 519 posts · 222 votes

Hey everyone,

I am looking at a triplex right now and could use a little guidance.  

When looking at potential rental properties, do you consider it with and without utilities included?  The current landlord includes electricity and gas.  I know a lot of people say to always just let tenants pay for their utilities but have seen others say they don't mind including them because it allows them to raise rent and in the end they make out with a little more in return.

They sent about 8 out of the last 12 months worth of electricity bills/statements and one statement of gas usage from June 2017-July 2017 (not very helpful since barely any gas was used).  What other sorts of documents should I be asking to see?  Leases? More documents for the utilities they include?  I have the whole analysis bit down when not including utilities but I wanted to see how that all broke down and if maybe it would work out for me.  

Also, when looking at rental properties or flips, what is the best resource for checking crime in the area?  Do you just call the police/sherrif's dept. and ask? If so, is there a specific person I should ask for in the department? Is there a site that gives you that sort of information?

I'm trying to learn more about getting as much data/information I can when looking at both rentals and flips... and I would love some guidance!

Thank you!

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  • Depew, NY · Member since 2017 · 44 posts · 40 votes
    8y
    If they're including gas & electric I would assume they're not split out. So you would need to include the monthly averages in your estimated expenses. Check out CrimeReports.com & City-Data.com
  • Investor · Columbus, GA · Member since 2014 · 2k+ posts · 1k+ votes
    8y

    @Brian H. If the triplex has one meter, then you will either need to pay it or add a surcharge to the rent to at least help cover it. You can ask the utility company to put separate meters. If you have separate meters, there is no reason the tenant shouldn't pay it. 

    As far as crime goes, you should know the area well enough to answer that one yourself. If it is a high crime area, I would discount the value of the property in my offer to buy.

  • Carolina · Member since 2017 · 519 posts · 222 votes
    8y

    @Justin K. They are not split out and I have created the closest average I can with only 8 of 12 months worth of statements from 2016.  I have included that in my analysis spreadsheet.  

    @Anthony Dooley  It does have one meter. Do utility companies generally charge you to add more meters?  I realize that may be a dumb question... and I am assuming they would charge you.  

    The current landlord had informed his realtor that a big reason he includes utilities is to make sure the gas tank doesn't go empty and his tenants choose to use space heaters (fire hazard) instead of the forced air that runs on gas, since they don't pay for electric. But now as I write that I realize IF they pay for electric, it would be more cost efficient to have the gas in the tank and run that heat... right? 

    I know the area somewhat and and learning it more and more as I move a long but I figured there would be places to turn to get that information as well, for investors that are researching areas?  

    Also, I had asked above, what other documents do people ask for when analyzing a potential buy and hold? Current leases? Past leases?  Just looking for some advice in that arena as well.

    Thank you for the input thus far fellas!  Sorry if I sound like a moron. I'm just new to this!

  • Investor · Columbus, GA · Member since 2014 · 2k+ posts · 1k+ votes
    8y

    @Brian H. Yes they will charge you, but it is a one time expense vs another year of utility bills for you. 

  • Investor · Columbus, GA · Member since 2014 · 2k+ posts · 1k+ votes
    8y

    @Brian H. the main thing you need to know is how much the tenants pay for rent. If it is below market, have a plan to incrementally increase rents over time, not all at once. Copies of leases may be required by the lender, but after you have the property  under contract, you will want to talk to the tenants. They can tell you everything the seller will not. Once you purchase the property, you will want to renew the leases. Even though their current lease is valid, it may not have the same rules and restrictions that you want. 

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