When to call a lemon a lemon?

Question

All:I have a 4plex up in Anchorage, AK. I've owned it since Aug of 2018 and in the last year I have had 4 separate claims filed for various water leaks that have cost thousands each... First one was trim nails driven into baseboard heating pipes that sprung a leak and flooded two rooms, next was a leaking main water valve in the boiler room that flooded the same unit... Then a bathroom sink backing up and flooding a different unit on the ground level, and now we are working through a leaking bathtub that flooded the ceiling of the downstairs unit below it... also had a few leaks from the washer drain valve and small leaks in the boiler room that haven't failed yet, but at this point I feel like its only a matter of time. Does anyone have any advice of what steps I can take to fix these repeated claims? It is to the point that every text I get my mind jumps to a tenant notifying me of another leak and my stomach drops until I read it... I filed the first two claims, which drove up my insurance costs $150/mo... and handled the third one myself - which I am also doing with my newest water damage claim out of fear of increased insurance costs again... in addition to a $2000 deductible for each occurrence, it has been draining my reserves pretty quickly and we just got into another property so things are tight for a little while.Any advice is most welcome! How do I mitigate these risks and get it to operate smoothly!?

Anthony Dooley · Answer

I would schedule an inspection of the units, with a plumber that you trust, unless you are already smart on plumbing stuff. I would have the plumber walk me through each unit and educate me on the common signs of leaks and potential problems, such as bad repairs from the previous owner or tenants DIY. I would focus on preventive maintenance before winter and try to head off problems before they happen. My hindsight is 20/20.

Jeremy Bartlett · Answer

Chris thanks for the reply!The baseboard trim was installed by a general contractor being used by the guy we bought it from - we’ve had to clean up several of his messes. The seller did feel poorly and did pay for the first claim because it happened less than a month after we closed. We get our boiler inspected yearly I just had it service by AK PowerVac and talked to AK plumbing services about its condition. Unfortunately it’s so old they told me they wouldn’t do much other than clean it, so we are waiting for it to fail and hoping we can recover to have the $13K necessary to replace it when that happens.I do require renters insurance from my tenants, however I think only one of four have an active policy. I haven’t dealt with it enough to know how to advocate for it when explaining to new tenants. We also preach an open communication channel with our tenants we also installed wireless water detectors under every sink, the washer, and the boiler room which have been worth their weight in gold because they are super obnoxious which forces tenants to deal with it right away, and it notifies us on our phones when one goes off so we can text directly to open the conversation.

Chris S. · Answer

Hey Jeremy,A couple of quick questions for you. First, who installed the baseboard trim and hit the water lines? I feel that was done by a professional then they should have paid for the damages,Second, how often do you get your boiler inspected? It should be yearly (I know you haven't owned it long) to ensure that small leaks/defaults get fixed before they become a big issue.Third, do you require your tenants to get renters insurance? If not then I would recommend you do so, you can even have them list you as one of the insured parties so that if a water backup does happen again you can file it under their insurance as well as yours (if you so chose) Check with the plans to see what they cover of course, not all cover water backup and you often have to ask to have it added. I have had a few issues but thankfully nothing that bad. A big thing I do with my tenants is make sure that they tell me when anything is even the slightest bit off. A drop in water pressure, sounds n the walls, etc...This helps to catch problems before they become huge issues. Hope that helps!

Judy Parker · Answer

@Jeremy BartlettDuring the first two years that you own a property all the problems tend to reveal themselves. Once you have repaired all these leaks, using licensed professionals, you shouldn't have any more of those problems for a long time. Keep moving forward!

Dennis M. · Answer

Leaks are part of owning older apartments. I know it sucks and I know your fear of the phone texts all too well . Repair it and keep moving forward . Get rid of old cast iron and replace what you can with pvc or more durable solutions . I reAlly hate leaks !they have Cost me a lot too but it’s just one of those things when you have multiple floors with apartments that you deal with . As others indicated keep your nose to the grind stone it will get better !

Jeremy Bartlett · Answer

@Sean Holland it’s a grey area for sure but ultimately the person doing the work is responsible for the outcome of that work. More seasoned guys will be more understanding typically, but still will want a solution that doesn’t come out of their pockets... in this case the seller paid up and stopped using that contractor. @Chris S. we definitely have a home warranty - $1399 for the 4plex - worth every penny. Has saved us even more than I’ve paid out in insurance deductibles. We have one through HSA - but read the fine print - they only contribute up to $1500 towards a new boiler system, which will help, but still leave $10K+ for you to pay out... of you have one with a different company that does pay the whole thing I’d love to know about it! @Billy Linn thanks for the encouragement. I think more than anything I’m frustrated with the amount of time I’ve had to put into fixing these things. Had I been able to save what I’ve had to payout and the time invested, I’d be close to another whole property by now! Just gotta stay the course though... I know you’re right.

Billy Linn · Answer

@Jeremy Bartlett these kinds of things can really test you, especially when they seem to all hit at once. You’ll come out the other side being tougher and smarter. We had a boiler that flooded a unit twice and we just didn’t want to deal with it so we converted it to electric heat. Might not be a good solution for your property but sometimes changing the type of heating system can be a good move.I’d say your on the right path, have water detection, educate tenants on what to look out for, and have some one available to rapidly respond to the situation. Maybe even the tenants can respond to a leak if they know how to do so.

Connor Dunham · Answer

Hey Jeremy, I don't know where your 4 plex is located or if it was hit hard, but the FEMA assistance and SBA Earthquake assistance is useful if you had any damage at all. Financing big stuff uncollateralized is super cheap with SBA. Water leaks aren't really related, but if the damage occurs in an area that was earthquake damaged already (separated pipes, cracked drywall, etc) you could kill two birds with one stone.

Jeremy Bartlett · Answer

@Anthony Dooley just saw your reply too! I’ve definitely been walking through with the plumbers from the home warranty company as they’ve been coming out. I pick their brains and ask questions - gotten some great advice. Just feel like I’m still getting bit regardless of how much I’m learning and preventative measures I’m taking... sounds like I just have to stay patient though and keep learning!

Anthony Dooley · Answer

@Jeremy Bartlett Don't give up! You have only had it for one year. The problems that you have already fixed will never happen again. Be committed to the reason why you purchased the property to start with. All properties need maintenance sometimes. Don't be a quitter. You will regret selling this to someone after you have done all these repairs.