All Forum Posts by: Jered Sturm

I listened to your guys episode today. Great stuff, Congrats on your success! 

@Matt Wood @Mike O'Connor @Azeez K.

I had chatted with Azeez a while back when you guys were working on your 32 unit, so its very cool to hear the progress

The pod cast will only accelerate your growth! I was the guest on show 124 and it has done many good things for me since it aired a year or so ago. 

I will be expanding our investment business and personally moving to north west Ga this summer. I haven't pinned down where exactly I'll be living but I have narrowed to Kennesaw, Acworth, or Dallas. Ill be making several trips down this summer to find a primary residence, and making the move in August. We will have to meet up!

again, great show and congrats to your successes.

Utility segregation is a fantastic way to add value, BUT its not always easy and its typically not cheap. Depending on how the utilities were run when the building was constructed this can be easy or nearly impossible. For example if you have one main water line that runs through out the building and smaller lines branch off it to feed one unit which then feeds another unit and so on. You will have to rip open the walls and run all new lines back to your service entry where meters can be installed. Also to separate water would require installing separate hot water heaters for each unit. Depending on if the hot water heater is gas or electric you may have to 1) run new gas lines and exhaust pipe to correctly vent the carbon monoxide. 2) run new electric to each hot water heater. because the additional electrical demand this would cause you may have to upgrade your service (circuit breaker panel). 

Check your laws!! I don't know your state but what your doing with water bill back sounds illegal. 

I believe in the future a massive shift in demand for sub metered properties will happen as water prices continue to rise. 

 I will be closing on a 42 unit in a couple weeks where gas and electric were sub metered when the property was built (1989). Landlord currently pays water but what we found when searching was the water lines are individually ran to each unit and each unit has its own HWH. This means placing a meter at the start of each water run. We can sub meter each unit for roughly $200. This process will pass on the $28,000 annual water bill to the tenants. The property is a 8 cap which means the savings will increase our property value $350,000 with only a $8,200 investment.

Word of caution. When considering sub-metering, you have to realize what the market is accepting. If you are the only building charging for gas, electric and water while all others around you are not but you try to charge the same amount in rent as the other guys, it wont work.

Attached is a very simple graph to show you why one of my underwriting criteria has been the sub metering of water.

Feel free to reach out if I can help.

.

Great work! Keep going strong. Nothing is more powerful than time when it comes to investing.

@Tanner Gish

Utility segregation is a fantastic way to add value, BUT its not always easy and its typically not cheap. You mention separating gas, electric and maybe water. Depending on how the utilities were run when the building was constructed this can be easy or nearly impossible. For example if you have one main gas line that runs through out the building and smaller lines branch off it to feed one unit which then feeds another unit and so on. You will have to rip open the walls and run all new lines back to your service entry where meters can be installed. In 26 units this would cost well into the 6 figures. 

To answer your question concisely. There is no rule of thumb, there cant be. Properties construction vary so much that it is too variable even for a general rule. 

I believe you're on to a great strategy and one I am actively pursuing in Cincinnati as well. I will be closing on a 42 unit in a couple weeks where gas and electric were sub metered when the property was built. Landlord currently pays water but what we found when searching was the water lines are individually ran to each unit and each unit has its own HWH. This means placing a meter at the start of each water run. We can sub meter each unit for roughly $200. This process will pass on the $28,000 water bill to the tenants. The property is a 8 cap which means the savings will increase our property value $350,000 with only a $8,200 investment.

Word of caution. When considering sub-metering, you have to realize what the market is accepting. If you are the only building charging for gas, electric and water while all others around you are not but you try to charge the same amount in rent as the other guys, it wont work. 

Attached is a very simple graph to show you why one of my underwriting criteria has been the sub metering of water. 

Feel free to reach out if I can help. 

.

@Spencer Campbell Welcome! Im not too far from you down in Cincinnati. I think you have narrowed to a great strategy with buy and hold multifamily. I am also in the same strategy. Feel free to reach out if you ever need advice on getting started. 

I bought a 6 bedroom house with my brother my first year of college. We lived in it and rented it to 4 other friends. One of the best choices I made. 

I share the details of that story in my Bigger Pockets podcast interview. Check it out here. https://www.biggerpockets.com/renewsblog/2015/05/2...

Welcome to BP and Cincinnati! Both are great places for REI. Good luck with your new venture. Let me know if I can ever be of help.

I don't know how many units you have but consider picking a flooring type that will work in ALL your units to standardize the material selection process. 80% of our rentals have the original hardwoods refinished and ceramic tile in kitchens and baths. 

I personally dont like the allure flooring. I used it once in a situation nothing else would work. I think its will eventually separate. 

@Christian Beebe I had a similar post a month or so ago regarding my 42 unit building. I found that after getting many quotes @Jason Bott was not only the most competitive pricing, but by far the most informative and helpful on the sales side. 

Good luck!

In many markets $20,000 can get you single family homes duplexes (2 units) or even more. They likely will not be good quality but they exist all over the country. 

I hope that clears things up for you.