Water billback in Cincinnati OH multifamily

3 Replies

Folks - I'm looking at purchasing a 10-20 unit multifamily property based in the Cincinnati area.  Rents are in the 600-900 range per month.  What makes or breaks the deal is my ability to migrate water payments onto the tenants.

Question for this community: how common is it for landlords to pay the water bill for Cincinnati tenants at this price point?

Note that I'm familiar with and have my opinions on the benefits and tradeoffs of getting water meters installed or implementing a RUBS system.  Determining the best billback method in this instance will be a downstream consideration after landing on the fundamental question for whether tenants typically pay the water in this market.

Thanks!

Landlords typically pay in this market. I think in some recently more desirable neighborhoods you could bill it back and still find tenants.

@Jonathan West typically yes. @Nathan Currier-Groh is correct. Property owners typically cover water and sometimes heat. This is the 2nd time I have seen this question and though water is typically paid for by the property owners I think there is a growing trend on putting the cost back on to the renter. Check out this BP Podcast, "Thriving in a Multifamily Investing (Even in a Hot Market) with Michael Becker Sept 27, 2018" Then check the 54:30 mark on that episode or listen to the begging of this line of questioning Brandon Turner and David Green ask Michael. Michael talks about increasing the value of the property using water meters. Hope this helps.

@Jonathan West

This will be very sub market dependent. If you are looking at market rents of 600-900 for a 1/2 bedroom apartment then you are dealing in C+ or better areas. While the vast majority of landlords in this area do pay the water bill, you may be able to pass the water cost onto the tenants if you are delivering a better product that has demand in that market. For example, market rents for a 1/1 600 sq ft with average level of finish renting for $600.00. Your building, being a 1/1 with 600 sq ft has substantially higher quality finishes, may rent for around $600 or even a bit more, but you are passing water cost on to that tenant. In my opinion this is the only situation where you will be successful around Cincinnati, when you deliver a better product for a similar price, they may be willing to pay more for their own water bill.

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