Interested in long-distance investing in Ohio

[Bob King]

Hi all,

My wife and I are currently looking at long distance investing, buy+hold rental properties outside of our local area. We have one rental in our local area but honestly, the homes are way too pricey vs rent to make it worth it.  We started looking at other towns after listening to the podcast and browsing the forums. 

I found what I think is a "deal" in Cleveland Ohio.  I would like to run it by someone who is familiar with the area to get a better understanding of whether or not it truly is a deal or no.  I'm interested in turn key properties.  

Are there any local/area expert investors, real estate agents or property managers that would like to connect?

Thanks,

Bob

[Christina Carey]

I'll chime in on the Ohio water/sewer part of this thread. A lot of comments are close, but don't quite hit the mark on how it works here. The water account can be billed to whomever you choose - tenant or owner. The key is in Ohio, the water bill stays with the property.

These are the things you need to know when buying or renting real property in Ohio as related to water/sewer (and sometimes trash) services:

• Each municipality is different. Some bill monthly, some bi-monthly, and some quarterly. Many municipalities bill water and sewer charges on the same bill - but not all. Likewise, some also bill for trash collection, which may or may not be billed with water charges, depending on who provides the service. It's enough to make your head spin. There are so many variations with the myriad municipalities in the greater Dayton area that I actually built a spreadsheet to keep track.
• When you buy a property, if the previous owner doesn't pay the final bill, there isn't a whole lot you can about it. It's not going to go to collections, nor will it show up on their credit report.
• If a disgruntled tenant skips out on a bill, you can pursue the tenant according to your lease terms, but you will ultimately pay the bill if you want to continue receiving service, whether or not you recover anything from the tenant.
• When buying buy a vacant property where water service has been shut off, check with the water company for past due bills prior to closing (see #1). This has NOTHING to do with a title search - you must do this yourself. Ensure that the amount due is either a.) credited to you on the the closing statement, or b.) paid by the title company from the seller's proceeds at closing.
• Whether service has been shut off for non-payment or by request, as long as the water company has record of a meter present at the property, charges continue to accrue. Let's say an owner disconnected service voluntarily and even has proof they paid a final bill, they often won't realize charges are still accruing - especially if the bill isn't going to the correct address (I'll save my rant on the administrative incompetence of utility companies for another thread). Again, see #1.
• Charges remaining unpaid long enough will be assessed to the property taxes and become due with the 1st half bill for that tax year (billed in arrears the following year - also a topic for another thread). If your purchase contract dictates it, assessments should be reflected in the seller's charges at closing, but title companies often miscalculate tax prorations and assessments - always double check. Or, if you've agreed to take over the taxes as they become due, be sure you know what charges you're assuming. In most counties, you can check for assessments on the auditor/treasurer websites, or call the treasurer's office.
• Each municipality is different. Some bill monthly, some bi-monthly, and some quarterly. Many municipalities bill water and sewer charges on the same bill - but not all. Likewise, some also bill for trash collection, which may or may not be billed with water charges, depending on who provides the service. Also, a property may receive services from more than one municipality. It's enough to make your head spin. There are so many variations in the greater Dayton area that I actually built a spreadsheet to keep track.

Bottom line is, charges for any service provided by a government municipality is tied to the property, and subject to assessment to the property taxes if they are unpaid.

Here's how we protect against unpaid tenant charges:

With exception for some small multi families, the tenants are responsible for all utility charges. Note I did NOT say they are directly paying all of the actual bills. For water, sewer, and trash services, we still receive and directly pay all of those bills, and assess those charges to the tenant's account. Typically we charge the tenant a fixed amount each month, even when the bill only comes quarterly. When the bill comes, if the charges exceed the tenant's payments for that period, they are billed the difference. Our lease also says that all payments are credited towards any outstanding charges before applied to the current rent. When rent is due, if they fail to include utility charges in their payment, then rent is not paid in full, and are subject to all the bad things resulting from unpaid rent.