Duplex with one address and one meter.

[Michael Maloney Jr.]

Hello there BP, I'm in the process of analyzing a duplex deal. I've done the numbers and used the BP calculators,(which are amazing btw). Here is the gist of it, at the purchase price of 90,000$ with a 10% down payment and and estimated 1000$ in repairs I came up with 1501.41$ in total monthly costs including principle and interest, and a total gross rents of 1600$/month. So that'll be roughly 98.59$ in cash flow for the two units total. Seems pretty skinny right.... The seller owns the property free and clear. He was renting the one side out to a very long term tenant I believe for 15 years or so for 650$/month, way under market rents and the other side he was renting to his son, but is vacant now for showings. The property has only one address and one meter so that tells me he's paying utilities. I averaged over the year roughly 200$/month per side. In my case this isn't going to work at a skinny 98$ in total cash flow, for two units. My question to you, is how can I go about splitting the units up with two different addresses and go ahead and sub meter it? Roughly what would the costs be to do it? I could then rent each unit at 800$/month and they can put utilities in their name and my cash flow will make more sense. Thank you in advance. -Mike

[Aaron Mazzrillo]

One address? Sounds fishy. You should make sure it is a legal duplex and not an illegally converted property. It may have been a single family at one time and that would explain the single address. The city assigns addresses and gives that information to the post office. You'd need to talk to someone down at city hall in order to get a 2nd address, if in fact it is a legal duplex.

As far as submetering the water, it typically isn't worth the investment on 2-4 unit properties. You're looking at $600-$800 per unit and then you need to read the meter, do the math, bill the tenants, etc. Forget about having the city put in another meter. That will start maybe around $5K. Just a guess, but I'm sure it is in the ballpark and definitely not less than $3K. 

I have quite a few units and it is normal that the landlord pays water for these residential properties. Unless they have separate supply lines coming into each unit, you might find that they share some pipes. Are there two hot water heaters? Are there individual shut offs for each unit?

Much easier to just factor in cost of water and adjust the rent accordingly. Water can't be that expensive in Michigan. Aren't there more than 10,000 lakes there and you're almost an island in the middle of the Great Lakes.