Ever buy an apartment complex that wasn't separately metered?

[Rohan J.]

I'm considering buying a 5-plex fixer upper in a very nice neighborhood in MO, but the only problem that I see is that meters are not separated so owner is paying all utilities. Everything else makes this a great deal. This is primarily because the units are all studios (4 studios, one 1 bedroom), so they never thought it would be big enough separate apparently. I asked about pricing for separating and it is a little too expensive and the whole process is not guaranteed to go as smoothly. Thoughts on purchasing this place? Any other concerns I should have when buying a bunch of studio units in a nice neighborhood? I was thinking of making each unit a little nicer and bumping rents from 500 to 600, but I'm also concerned about tenant turnover because the units are smaller .

[Thomas S.]

Tenants will abuse the utilities if you ever have to evict and it will cost you thousands. Tenants never care about the cost of utilities when they are not paying. They will use the oven to heat the unit, open windows in the winter, leave lights on and water running all the time etc. 

Regardless of the deal unless I intend to separate all utilities I would never invest in a property that tenants do not have all utilities in their own name. It is simply a bad investment if you have any other options. There will be a better investment opportunity tomorrow. Get it right the first time, do not settle for second best.