How to Handle Snow Removal

Question

How do those of you with multiple self managed multi unit properties with decent snow fall handle snow removal? i'm thinking adding to my lease that tenants are responsible for their own snow removal. i cant imagine the logistics required to clear out 20 driveways in one morning.

James McCard · Answer

That is a tough one. This year is the first year I am actually thinking of not plowing. I will keep my truck and plow for my own personal stuff but to run it as a side business it is tough. I would say hire it out if you can afford to, as if the tenant does a crappy job and someone slips it can be a real pain. Even if it is a single family remember that the UPS/Fedex and USPS man probably come by and while the chances are small it still could be an issue.

Michael Cavicchi · Answer

I would have to agree that single family you are on your own and any sort of multi family situation where the driveways aren't separated you hire it out. This is really the only way to have it be hassle free for both you and your tenants (although there are times the plow truck driver doesn't show up just like any contractor).

Sometimes you can get one of the tenants to do volunteer to do it for a cut off the rent but when they move out you're going to be scrambling to find another person who is willing to take on that task.

Scott Hollister · Answer

@Richard Arden I see that your from Hawaii, first things first I hope you never have to deal with snow removal...haha

Two: being in the Northeast, snow removal can be a huge expense and often changes each year unless your contract is a fixed expense. I know some of the larger commercial properties have fixed rate removal. Often most expensive but allows you to factor it into your expenses so your NOI doesn't change that much every year.

When just starting out, the only time I "think" its ok to do snow removal is when you are house hacking your first multifamily. Just to get a feel for it. But even now, reflecting back over my short 6 years of investing, I never really to want you to do it and heres why:

• Even if you house hack a 4 unit, you are really only paying 25% for each snow storm removal. If you look at it like this, you are really not saving any money by the time you have to go out and buy salt, snow blower, and shovels. AND get up early before your tenants leave for work.
• Also, this is why you should not perform snow removal yourself. The liability! There is a local owner of 44 apartment units. He has done snow removal for almost 30 years. He got sued last year for over 70k because a tenant slipped and fell. Once you factor in the headaches and "saved" money, you really lose in the end. And the ultimate goal to invest in real estate is so that you can afford the freedom from a Job. If you take up snow removal, you are working a job.

Here is how I handle snow removal. With single family homes, I place it on the tenants responsibility. I offer snow removal for $80 dollars extra a month. If it goes over that cost per year I pay, if it goes under then you get a check for the difference. But It costs, on "average" about $960 per single driveway per a standard year. This could easily double with a bad year, small storm year around $500. This also depends on how difficult it is to plow, where you can place the snow, vehicles in driveway, etc. It it is a multifamily, 2+ units then it is your responsibility to hire it out.

Best advice is just to factor in snow removal when you do your underwriting. Have a good company come out and quote you. Also check with your insurance, they may require putting salt down as well. Typically an extra $25-$30 bucks each time.

Troy Marschall · Answer

Multi-unit properties, correct? I would contract it out, and then work the price back into the rent when new leases are formed. If these are townhome style apartments with a driveway in front of the garage, then yes, I would agree that in new leases you could say the tenants are responsible.