All Forum Posts by: Christina Carey

I'll chime in on the Ohio water/sewer part of this thread. A lot of comments are close, but don't quite hit the mark on how it works here. The water account can be billed to whomever you choose - tenant or owner. The key is in Ohio, the water bill stays with the property.

These are the things you need to know when buying or renting real property in Ohio as related to water/sewer (and sometimes trash) services:

• Each municipality is different. Some bill monthly, some bi-monthly, and some quarterly. Many municipalities bill water and sewer charges on the same bill - but not all. Likewise, some also bill for trash collection, which may or may not be billed with water charges, depending on who provides the service. It's enough to make your head spin. There are so many variations with the myriad municipalities in the greater Dayton area that I actually built a spreadsheet to keep track.
• When you buy a property, if the previous owner doesn't pay the final bill, there isn't a whole lot you can about it. It's not going to go to collections, nor will it show up on their credit report.
• If a disgruntled tenant skips out on a bill, you can pursue the tenant according to your lease terms, but you will ultimately pay the bill if you want to continue receiving service, whether or not you recover anything from the tenant.
• When buying buy a vacant property where water service has been shut off, check with the water company for past due bills prior to closing (see #1). This has NOTHING to do with a title search - you must do this yourself. Ensure that the amount due is either a.) credited to you on the the closing statement, or b.) paid by the title company from the seller's proceeds at closing.
• Whether service has been shut off for non-payment or by request, as long as the water company has record of a meter present at the property, charges continue to accrue. Let's say an owner disconnected service voluntarily and even has proof they paid a final bill, they often won't realize charges are still accruing - especially if the bill isn't going to the correct address (I'll save my rant on the administrative incompetence of utility companies for another thread). Again, see #1.
• Charges remaining unpaid long enough will be assessed to the property taxes and become due with the 1st half bill for that tax year (billed in arrears the following year - also a topic for another thread). If your purchase contract dictates it, assessments should be reflected in the seller's charges at closing, but title companies often miscalculate tax prorations and assessments - always double check. Or, if you've agreed to take over the taxes as they become due, be sure you know what charges you're assuming. In most counties, you can check for assessments on the auditor/treasurer websites, or call the treasurer's office.
• Each municipality is different. Some bill monthly, some bi-monthly, and some quarterly. Many municipalities bill water and sewer charges on the same bill - but not all. Likewise, some also bill for trash collection, which may or may not be billed with water charges, depending on who provides the service. Also, a property may receive services from more than one municipality. It's enough to make your head spin. There are so many variations in the greater Dayton area that I actually built a spreadsheet to keep track.

Bottom line is, charges for any service provided by a government municipality is tied to the property, and subject to assessment to the property taxes if they are unpaid.

Here's how we protect against unpaid tenant charges:

With exception for some small multi families, the tenants are responsible for all utility charges. Note I did NOT say they are directly paying all of the actual bills. For water, sewer, and trash services, we still receive and directly pay all of those bills, and assess those charges to the tenant's account. Typically we charge the tenant a fixed amount each month, even when the bill only comes quarterly. When the bill comes, if the charges exceed the tenant's payments for that period, they are billed the difference. Our lease also says that all payments are credited towards any outstanding charges before applied to the current rent. When rent is due, if they fail to include utility charges in their payment, then rent is not paid in full, and are subject to all the bad things resulting from unpaid rent.

Depends ... what are you including in "all costs"? Assuming a fully stabilized/updated property, expenses and reserves typically are 50% of income - more if heat is owner-paid. (You can get averages from the utility companies for an idea of what to expect, and whether the seller is being honest.) Add more for any deferred maintenance and/or outdated units.

For that price and rent range, I expect 1BR units in a C- area (or worse). Small multis are already more management-intensive than single family homes, and that effect is compounded in lower-quality neighborhoods, where vacancy, maintenance, and general tenant dramas will all be higher. (Style of building does matter though; side-by-side units tend to have less turnover and drama than buildings with 2 units up and 2 down.)

If my assumptions about the area are true, we'd be at $300 for management - a $75/unit minimum - effectively doubling your PM costs over the average. 10% of $1600 for 4 units may not even cover our costs in some months - send someone to post a pay-or-quit notice; another for a maintenance inspection; then add typical common area management, collection and accounting tasks ... time is money. Other PMs may charge less and they can have every C- quad in Dayton; regardless of income, the aggravation just isn't worth it.

One last thing to consider: property taxes are based upon the value of the property assessed by the county auditor - which may or may not be consistent with market value. If it is under-assessed now, and a sale is recorded at a higher amount, the auditor will raise the assessed value accordingly on the next update, which occurs on a triennial cycle (we're in year 3 of the current cycle now). Higher value = higher taxes.

If you can post a little more detail on numbers, I can provide a little more help than sweeping assumptions. : )

Hi @Gary A deblaquiere - we might be able to assist in Dayton. The market here is very hyper-local, so specific streets - and even blocks - matter. Especially within the city limits. Most efficient would be to shoot me an email with the list.

@Tom Ott Actually, Dayton currently has a shortage of quality housing - demand is high. Especially post-tornados. And the Dayton metro isn't as small as you think. It's small enough to be able to travel from one side to the other in about 30 minutes, but still big enough to enjoy a level of anonymity that anyone who's ever lived in a small town would appreciate.

There is a very diverse employment base here, including WPAFB, medical, biotech, defense manufacturing, and Amazon is opening a facility here soon - just to name a few. The days of Dayton as a rust belt city dependent on automotive manufacturing are long gone - a result of the recession 10+ years ago. Situated at the intersection of two of the busiest interstates in the country, this area is ripe for more business to move here.

As with any other city, there tends to be little appreciation in the C- and below areas, and the suburbs tend to appreciate modestly over time. And there are very few areas where I would be concerned about walking at night.

At $550 per month per unit, these are either 2BR units located within the City of Dayton, or possible 1BR units located in one of the suburbs. Either way, I would not bank on that much appreciation over time as it's projected in the report. 4-plexes are still appraised on comps, not NOI.

Unless this is a fully stabilized property, the capex and maintenance are way too low. The two combined are more like 15-20%. Not sure why there is PMI, but maybe you meant property insurance, as I don't see that on the list? Your water/sewer amount should also include trash, if it's in the City of Dayton. In the suburbs, there may be an additional expense of around $40-50/month.

Hot water may still be common - could be electric or gas. Maybe that's part of your electric cost? What about laundry hookups? Assuming they are present in the basement, are they metered to the tenants or the common electric?

Lastly, many of these old 1940s-build quads are also still on a common boiler for heat, which means you'll have a hefty gas bill 5+/- months of the year. If the boiler has been retired, then it's likely electric baseboard heat and paid by the tenants.

If you'd like to PM the address, I can take a quick look at the property details.

There are a lot of variables when it comes to roofing. I assume you're talking about a shingle roof. $10K is a LOT of roof. We've had many single family and small multifamily roofs done for $5K or less. A few have amounted to more, but those were either really large roofs, or there were some other extenuating circumstances, like multiple layers with the bottom one being cedar shake, therefore it not only needed shingles, but all new decking as well. And for what you'll pay later in increased premiums, the claim with that that high of a deductible is just not worth it in my opinion.

At $5K deductible per property, unless these are monster-size roofs or some other extenuating circumstances, it's not worth the claim.

Depends on what you need, and for what type of property? If we can't help, we'll point you in the right direction.

Yep - Joe Lucas does a lot of valuation complaints.

Performance Title in Kettering is very investor-friendly. For PMs, depending on what kind of rentals you're looking for and where, we might be able to help. If not, I can refer you to a couple who can.