Well Water vs. City Water??

Question

I'm looking to buy a 2 bedroom 1 bath single family home as a rental property. It needs some work. i.e. new kitchen and bathroom, paint, finish hardwood floors, patch the roof, maybe paint exterior...I'm a little concerned because it has well water and a septic tank. It's been winterized so I'm unsure on how to make sure everything is working properly. Would it be best to switch it to city water? The property is listed for 32k. A property two houses down (also bank owned) is listed at 70k. I could most likely get $800-$950 in rent. Taxes and Insurance will be about $330 a month. Taxes are high, but I'm hoping to have it reassessed. Please Help!

Amy A. · Answer

About 2/3 of the REOs I've purchased have frozen pipes/boilers because they were either winterized too late or incorrectly.  I always budget for all new plumbing and a new septic system.  If they're ok I just make more money.  If not, I'm ready for it. 
Around here we have radon, so if the buyer tests and it's high, you can pay a few thousand for a filter.  I find homes with public water are lower risk, but still buy where there's a well and budget appropriately.
  Always check with the town.  I just passed on a house in my town because as a planning board member I knew that the groundwater is contaminated with benzene and salt in that area.  It didn't stop another local investor, who netted around $45,000 on the flip but didn't disclose the problem.  The deal simply wasn't worth the loss of my real estate license or my integrity or reputation.

Xing Zhu · Answer

My subdivision uses wells, which are much more expensive than city waters. Wells are managed by a private company. We just pay monthly bills.

John H. · Answer

Have you had the septic tested?  That scares me as much as a well.  Over the summer a house down the road had a failed septic and it cost $34k for the new one.  Around here an average septic is 10k-25k.

James Hamling · Answer

If it ain't broke, why fix it until it is?

I'd like to think you already calculated the ROI, and lets say it is a net zero so it becomes a hem and haw if should or shouldn't. ext calculation should be remaining life span, and cost differential of now vs then and increased value. The timing of the additional cost for taxes could be a big factor as well. 
   If it came down to emotions over numbers my daughter would be my designer and all my hones would be pretty pink with sparkles....

Bill Gulley · Answer

From time to time, with being at the age I am, it is necessary for you to suffer with my stories.....

When I was a kid I lived in a small town, Nevada, Mo. The town had a very high sulfer content and it tainted the water in that area, the water actually smelled and tasted really bad. There were two highways that ran through the town with a popular hamburger joint, greasy spoon. In the 50's there was little entertainment in small towns and the locals would hang around listening to the jukebox. The real entertainment was watching out-of-towners stop for lunch and take a drink of thier water! The faces they could make......

Just because the water tests out, I suggest you taste it!

If you have more than one party on a well, make sure you have a recorded well agreement stipulating how maintenance and repairs are to be charged and paid among the parties to the well. (Same with shared roadways, and sewage treatment facilities, BTW) Septics are not usually shared.

Trevor Smith · Answer

I did some more research and the property has already been converted to city water. Next question is what do I do with the well. I potentially want to section 8 the property. Would I have to have the well filled? I'm in the suburbs of Philadelphia, Pa.

David Niles · Answer

I can only speak for my area Trevor Smith, once that city water is available you have to tie into it.  You can still keep your well for irrigation and such but your residence would be on city then.

Trevor Smith · Answer

Thanks Gene for your response!

Gene Hacker · Answer

In my area properties with wells sell for a large premium over city water.  The "city water" is a privately owned government sponsored utility and they raise the rates every year many time the rate of inflation.

Most of my rentals are on septic and a few are on sewer.  Septic tend to be way cheaper than the sewer fees.  But it tends to hit in big chucks.

Many of my better deals need septic system work.  Even paying a contractor they still tended to be cheaper in the long run than sewer fees but I bought a small backhoe so new leach fields are not expensive or time consuming anymore.

Trevor Smith · Answer

Thanks Dan and Steve for the response...I'm going to call the township and listing agent tomorrow to get more information. I'm sure I will have more questions after I get some more information. From talking to friends who are in the business as well, say either way its a good deal.

Well Water vs. City Water??

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