Your Opinion on Closing Laundry Room & Billing for Water

[Ken Latchers]

I am about to close on a newer 6 family. It is fully rented, but was not managed well either financially (less than 1 month security, very high water/laundry bills, etc.) or contract-wise (simple 1-page contract). Once I close, this is my plan, in rapid succession.

Water bill is $300-$350/month to landlord, and checking with water utility indicated it should be closer to $150/month.

1) Bring out Water Company Rep to ensure main water feeed not leaking.

2) Close Laundry Room - Basically a shed in backyard with space heater, 3 free washers & 3 free dryers. Tenants leave doors open and I am convinced neighboring MHFs come in to do their laundry. Costs: $50/month for a tenant to "keep clean" + $100/month electric/heat + likely $150 for water. Total costs likely $300 out of $2100 total max rent.

3) If leak check and closing laundry room still leaves high water bill, implement RUBS to bill tenants for water (RUBS is an estimated bill to each unit by and independent company). I may/may not give tenants 30 days to get out of their contract before implementing

NOTE: I will have no problem getting more tenants at market rates.

ANY THOUGHTS TO THIS PLAN? I am willing to take a short term hit to rent to bring this building up to profitability. Seller is out of area, and also spent $300/month to a manager.

[Michael D.]

Yes, the washer and dryer are probably an implied part of the lease, since they were available when the lease was signed. One thing you could do is specifically exclude them on each renewal, and then close-up shop once everybody is excluded.

With the RUBS, you can install whatever equipment is required right away, but then only write it into the lease when it comes up for renewal.

You can't just start charging for water in the middle of a lease just because you want to. And giving them an option to leave isn't a solution either. The lease includes water and binds you as much as them.