Landlord pays heat and hotwater

[N/A N/A]

I have always read that you should never take over a rental property where the landlord/owner pays the heat & hotwater. What has the experience on the board been?? Has anyone ever taken over a small multi-family that was set up this way??? Does it ever pay to switch the roperty over to individually metered AFTER you purchase the property?? I guess it really depends on the price??

Thanks!!!

[Richard F.]

Building practices vary by region. It would be foolish to bypass a potential deal just because owner pays certain utilities. You just need to understand HOW the system is designed, and then determine if it is more cost effective to change the overall configuration, or simply mitigate potential abuses and simple inefficiency.

If you are paying the heat, you better ensure you have adequate insulation, weatherstripping, and storm windows. Be sure exterior doors have closers that work. You also need to be sure the tenants do not have access to the temp control. On hot water/steam systems, I used to install a timer that would "cycle" the system off periodically. If you have a really cold snap, you can bypass the timer and let it run 24/7. You can get a battery operated monitoring device to log the actual temperature in an area over a 24 hour period to verify you are providing adequate heating. Obviously, regular service and filter changes are crucial for forced air systems.

You can use the timer setup for electric water heaters also, shutting them off for several hours at night when most are sleeping, and again in the daytime when they are working. Same for AC's...window units can be wired into a "wind-up" timer that automatically shuts off after three hours of operation so they don't just let it run all day when the home is empty.

Submetering is not always an option, but if your circuits are easily separated between units, or if you can separate just common areas, then it's worth checking on the cost of doing so. Then you can bill the tenants for some or all of their actual usage, depending on what you are able to split off.

If you ARE going to end up paying the utilities, you MUST be vigilant in preventing abuse from the tenants. Set up your house rules with specific regs, and CASH fines.