All Forum Posts by: Sam W.

How much success does everyone have with submetering? I'm okay with one more logistics "fly" thrown into the ointment if there is value added. I'm concerned that besides the normal rent collection for the property, I now have to read meters, send out bills, and collect utility payments.

I guess I'm torn between wanting to recoop the water/sewer charges and the desire to simplify my management burden by adding a few dollars to the rent I charge and calling it even. Probably not good business sense but would be interested in how submetering has worked out for others.

Thanks

All...very interesting thread.

Chris - you recommended shooting to purchase at 50x rent. What is the thinking behind this metric? Is that another way to think through the "2% rule"?

Thanks

I own a few multi-units (duplexs, tri-plex and one 4-plex) and have this dilemna with some of them. A few have all utilities completely separated, but some have only one water line. In these instances, I pay water and sewer for the building. In my experience, the water/sewer expense has not been overwhelming and I slightly increase the rent to account for it.

I have looked into running separate water lines at several of the properties but I could not really justify the expense. In one property, it would cost about $2600 to add the additional line (cost of the line plus the city "hook up" fee). When my average water/sewer bill is running me about $33 per property, it is tough to sink the money into the new line.

In general, the monthly water/sewer bills on all of the properties are fairly predictable so I have built them into what I ask for rent.

That said, I have avoided properties in which the gas or electric utilities are not separated because I could see those bills getting out of hand quickly and fluctuating wildly from month to month (and tenant to tenant). I have absolutely nothing to base this on as I've never owned a property like this, so it is just a built-in bias. I would be interested in other owners' thoughts on single gas/electric metered multi-units.

Raza,

Not sure of the specific laws in NY, but in Ohio it is simply a matter of filing a Quit Claim Deed. I went through a title company and it was very simple (actually did a couple properties at once...charged me $125 total). Make sure you let your insurance company know the property has transfered.

Good advice Shanequa regarding biting the bullet and putting the stackable washer/dryer in the unit. This is an unusual applicance that many prospective tenants won't necessarily want to buy. They would probably be hesitant to rent the apartment if they had to purchase a stackable.

Jeanette...I've installed quite a few of the apartment sized stackables - in fact am buying two more in the next couple of days. I like offering washer and dryers as it helps the unit rent, especially when an odd size (stackable apartment size) is required. Most tenants won't go out and buy this type of appliance.

Here is a pretty good deal in your area on a stackable:
http://fortcollins.craigslist.org/ppd/3208962881.html

Sam

All very good suggestions.

Might also consider a HELOC on another property you own. I've done this to purchase a couple of properties similar to one you describe.

I've also been able to secure smaller ($30K) mortgages from local banks but that is obviously regionally dependent (and it sounds like you've run that to ground already).

If the property you've found is not a foreclosure, perhaps the current owner would be open to carrying the note (which I've also done a few times).

Good luck

Uwe and Dan,

Thanks for the thoughts and insights. Two different approaches but both very interesting and possibly agreeable to the property owner. My challenge will be coming up with something he is comfortable with. As Uwe said, he is not terribly motivated right now. Let me ponder on this a while and will probably come back to you with some questions.

Sam

Have never purchased a Freddie Mac property, but Fannie Mae does prohibit conveying the property for specific sales price (usually 20% higher than the purchase price) for 3 months. Interestingly, Fannie Mae also prohibits encumbering the property with a lien (e.g., HELOC) for 3 months as well (if you paid cash for the property).

I'd never forgo a title search. Besides determining if the seller has a "saleable" interest in the property and identifying any liens, the title search also identifies any restrictions or easements on the property.

In a property that I purchased recently, the title search turned up a parking easement that allowed the next door neighbors to park on a 12 foot strip of land between the properties. This right of way was established in 1924 and the seller had no idea it existed.

While your seller may truly be noble and honest, it is worth the couple of weeks and few hundred bucks to sleep better at night.