Hi all - thinking of putting in an offer on a property in South Jersey. I am having trouble hearing back from the seller on some of the costs of the property so I'm trying to get a sense of what costs I might encounter. I so very much want to put an offer on the property and I've estimated some costs, but would like to get some calibration from other landlords/homeowners.
The owner pays:
Heating for 2 units (a 2 BR/3 BR) - I estimate this to be $1200 per year ($600 for each unit)
Common electric - Assuming $600 per year ($50 per month)
Water - Assuming $1800 per year ($150 per month for both units)
Sewer- Assuming a flat charge, but unsure, assuming $600 per year for the property
Garbage - Not sure if there is a garbage cost in NJ, but assuming $500 per year for the property
I have other expenses already lined up, e.g. PITI, CAPEX, Vacancy, Maintenance, etc. Just looking to align some of the "township" costs based upon what other New Jersey residents/landlords may be paying.
Thanks in advance!
I havent seen anyone reply yet so I will help the best I can. What jumps out to me is the expense estimation. My first thought is if you have a tenant and you pay for the heating or electricity or water there is no incentive to not use all those 24/7. Is there a limit in the lease as to how much you will pay for all these?
Sewer and sometimes garbage are baked into the property taxes in northern NJ. Not sure about Philly area but give the town a call.
Is the owner resistant in providing? That may be a sign of something they're hiding?
I agree with @Cody Evans in that you want as much of the variable liabilities in the tenants name. Are the utilities split for the 2 units already?
I include sewer in mine since it can't be "split". Some utilities, such as sewer authorities, can put a lien on the property for unpaid balances so you probably want that one in your name. You usually can't split that one anyway since it's not metered per se.
You could always try to lock up the property with an offer pending inspections or copies of actual bills which would give you more time to figure it out.
Would agree with others that most of those costs should be available via the landlord. However, if they are slow in getting those numbers and you want to do some estimating, I think your water number is high and your heating number is low.
I pay water on most of my rentals and have several duplexes. Water is typically $600 - $800 annually.
Hi all, thanks for the responses - I knew I could count on BP for some help! :)
@Cody Evans the landlord pays common electric (assume the hallway lights and peripherals are on 24/7) but the units pay their own electric. The units share the heating system, and the unit is set at a specific temperature and it is a locked unit (only landlord can change). I'm unaware of any limits but I also have not seen any leases yet; all I know is that the landlord covers those as part of the rent. Ultimately I think this is a mistake and may be one of the ways I can decrease landlord costs for a better CF and COC return.
@Alex V. what a great idea, and I'm ashamed I didn't think of calling the town myself. I ended up doing that and confirming that garbage pickup is part of the taxes, but water/sewer is a quarterly bill and the person on the phone gave me an average dollar amount. I also confirmed there were no other "gotchas" that weren't part of property taxes. Appreciate the thought!
@Grant Miller I'm not sure what's going on with the owner. Getting ANY information has been sort of tough, which is why I think the property has sat on the market for so long. I have no doubt most sellers hide SOMETHING that they find to be a problem, but those problems can either be roadblocks or huge barriers -- just depends on how they are approached. The utilities are split for the units except for common electric (landlord pays), and heating (one heating system for both units, set at a locked temp). As mentioned earlier, I am hearing that heating and water/sewer are part of the rent. Ultimately I believe while this will save the headaches down the line, I'm curious to see how much of a dent they make into the overall profitability of the property. I may be making an offer contingent upon inspection/copies of bills which is not a bad idea at all -- thanks for the insight!
alot of good replies. as a realtor in ny with the exception of electric and heating cost, i would refer to the town hall departments may be able to answer the other questions.
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