Fellow NEPA Investors,
I currently have a 3 - unit multi family in Dunmore, PA. I have owned it since June 2018 and all of my leases are ending March 31st of this year. My leases / tenants were inherited...
some info about the property:
each unit is 3bed/1bath ~1200sq ft each
basically no updates have been made since the 50's?
Tenants pay Electricity
Owner (me) pays: Gas (heat ~$290/month avg), Water - ~$420/month, landscaping/snow removal ($40-$80/month)
Question 1: What do you think is a fair rent increase or fair rent for the area. Keeping in mind that I would much rather them stay then have to turn over a unit.
Tenants currently pay:
Apt 1: $575/month +$25 pet fee + $100 for use of the 2-car garage. Tenant has been there 12+ years
Apt 2: $625/month. Tenant has been there 1 year
Apt 3: $600/month. Tenant has been there 9+ years
Question 2: Should I include the washer and dryer?
The washer & dryer was provided by the original owner (for all 3 units!). It's in their current lease that the owner (me) is responsible for all repairs. They are at LEAST 20 years old and are all about to die. From what I've seen in the area Washer/drier are not typically included. I was thinking to not include these as an owner responsibility moving forward.. Thoughts appreciated on this.
Question 3: Anything you would include in the lease beyond the standard lease agreement?
I've downloaded the bigger pockets lease agreement for Pennsylvania. If anyone has used this, do you think there is anything to add?
@Amy Engelhard , your leases are super low.
Fair market rent for Lackawanna County for 2019, recently dropped. It is at $1007 for a 3 bedroom and this includes ALL utilities paid by landlord.
In my opinion, I would subtract $50 off the rent for electric since you pay all other utilities. Make tenants pay electric. So your rents should be around $900-$950 for your three bedroom units. You might want to increase your rent one unit at a time. You will most likely lose 1-2 units worth of tenants, but some painting and a few upgrades should give you the edge to re-rent the units at almost double the rent. March is the start of busy season, March and April are great months to rent units!
Lastly, if you have a washer and dryer in the building and you are paying the electric, water, and gas on, it is a no brainer to keep them. I suggest these:
You can make additional income on the laundry. And it will help reduce the utility costs on the building. If tenants have to pay for laundry, they will use it less. Keeping the coin boxes cheaper will still offer tenants a bargain, considering laundry mats are probably $5-6 per load.
Hope this helps!
I think maybe I explained washer / dryer situation poorly. Each unit has a washer and dryer.. so i have 3 washers and 3 driers that are all 20 years old and currently my responsibility to fix. There is no common area to put in a shared laundry area. There is a basement - unfinished - primitive at best, it wouldn't work.
I don't think you would put a coin operated in each unit?
Yeah @Adam Guiffrida meant a coin operated laundry in basement I think. IMHO you might not be ready for that if you are just starting - who is going to go around and collect the coins for you? I think as you are signing a new lease specify that inherited W/D in the units are free for tenants use but will not be maintained. Maintain all else (Fridge, stove, dishwasher). Correct it is not standard to include the W/D but it is appreciated and reflected in rent. Tenants bring their own usually for me. And if they don’t - you save on water, plus you don’t have to maintain them.
Again as Adam said ideally now you would be modernizing by renovating one apartment at a time and increasing rent but you may not be ready.
Rents are under market.. yes.
Keeping in mind that you seem to like the tenants than more rent increases and renovations, perhaps yes try not to upset your good tenants and increase rents slowly? And it works better if you are improving the property at the same time, even if its little things.
Water cost seems a little high. For comparison Im paying $150 for a duplex, $200 on a bad month. When eventually you are renovating put in efficient toilet, shower heads, aerators on sinks. See that there are no unexpected leaks. And again those washers in every unit are contributing.
See if you can offer a $25 / mo rent decrease to one of the tenants in exchange for mowing the grass. Less hassle for you.
@Amy Engelhard , I was under the impression the laundry was common. If they are all very old laundry units you should take them out when you re-lease the units. Having laundry on a second and third floor is a bad idea especially if they are old. If they leak it will destroy one or two units. If you don’t remove them have a plumber install a drain pan and drain under each washer.
If it were my situation, I’d cap the laundry lives and install a setup in the basement as long as they all have access. Coin laundry is another income. As you expand your portfolio and have several more coin washers and dryers, it makes collecting them more worthwhile. It’s usuallu 3-4 months before they are full.
And yes, I agree with @Aleksey F. , any renovations should include new toilets and faucets. It will cut utilities and leaks down substantially. Stay clear of the Glacier Bay brand, it’s junk. I recommend Delta, it’s the cheapes and easiest to get parts for.
@Amy Engelhard , I agree with @Aleksey F. about the water cost. I would look into why it is so high for 3 units. I also agree with other comments about replacing toilets and faucets. I would also look at lower flow shower heads.
With regard to your question about washers and dryers. You are right that many landlords do not include those. Maintaining and replacing them can feel like a hassle (if you let it). I think the value of providing them to a tenant is fairly high. A tenant thinks of the cost (of a new appliance) and the difficulty getting them moved and installed and to them it feels like a lot. As a landlord, I have a handyman and a truck or van for moving appliances. In addition, I can get a good used appliance for $100-150 each. So, the cost isn't so great. If an appliance fails I will usually just replace it unless its a simple obvious fix.
I recommend buying a used washer/dryer set and storing it in the property's basement. So, if anything fails you can have a handyman swap that spare appliance in and take the old one to the scrap yard.
I personally feel that providing some things like this is a "point of difference" and makes my units more desirable without that much extra hassle or cost. My goal is always to attract a better tenant, even if its a C class rental I'd want the best tenant in the C class market I could attract. If I provide them with more than they could get elsewhere. They will pay and stay a long time!
The water bill is outrageous. I've been getting mixed opinions on this. The water portion is actually ~$300, the sewer is $150. Most people who I have talked to think this may be closer to "normal". Also there are 6 (yes 6!!) adults living in unit 1. Also i just spent a few thousand $$ fixing several leaks (all small - nothing major) all up the column of pipes leading to the bathrooms. he also replaced all the valves in the basement. Next month I should be able to tell if this had an impact.
likely its worth installing low flow/ water efficient shower/toilet/ and even buying a new HE washer for Unit 1
I like the idea of installing coin laundry in the basement. I will probably look into that as the units turn over..
@Amy Engelhard , that sheds some light on it. I still think that is high and you are in one of the few areas around here where the sewer bill is based on water consumption. So, this is an issue worth addressing.
If you want to research where the water is going they sell devices that can track water going through a given pipe (to each unit) and allow you to see who is using more or even to use it to bill the cost back to the tenant.
When landlords pay utilities, many times their costs vary depending on the number of occupants. So, some landlords charge so much extra per occupant above a certain point.
For example, maybe you would charge $25/month extra for every person over 3 living there. So, for the unit with 6 people that would be an extra $75/month.
@Amy Engelhard I would be cautious about low flow toilets in an existing building that did not have them. You wind up flushing more than once and pumping every few days, probably using more water than before. Especially with rental properties and tenants it is not worth the aggrevation. People also complain of bad odors coming from pipes that are not completely cleared. Today I would go find an older model toilet if I needed a replacement. With the low flow washers you have to educate your tenants to use way less soap or you will end up with a mess on your hands. When I went with new coin washers I provided free 'Pods' for a week to educate the tenants and avoid overflowing and service calls. All the best!
thanks @Bjorn Ahlblad good advice!
One more question I thought of- is it common to require tenants in NEPA to pay for renter's insurance?
Hmm good question that I struggle with as well. I only strongly recommend it, especially when the tenants have cat(s). I don't allow dogs but if I did I would require it.
@Amy , we require that our tenants maintain renter's insurance. We refer them to someone we work with that gives decent rates, and good coverage. Also helps because if they cancel their insurance they let us know.
If they don't use who we recommend we ask that they provide the declaration page to show proof of insurance.
@Amy Engelhard , it sounds like you're doing great with this 4-plex! I am a property manager in Corvallis, but since the cost of entry out here is so high, I'd like to look at other areas for my own projects. I'm intrigued by what you did!
So, how did you pick the area you invested in? Did you buy it through a turnkey company?
Thanks for the input!