Duplex vs Triplex vs Quadplex

[Alex Corral]

For those who actually own these type of properties, or PM companies as well.. What is your experience with cash flow and vacancy?

Do the duplexes do better, or the tris or quads?

Very interested in hearing your experiences and thoughts!

Alex

[Jack P.]

@Julian H.

In reality, the costs of the utilities (in this case water) are reflected in the rent.  You can also charge the tenants a utility fee in many locations.  However, it's a marketing thing.  Most tenants look at the simple cost of the rent, and only use that to compare prices.  If I am comparing two similar properties, but one has water included, tenants will likely choose the one with the less expensive advertised rent price, regardless whether or not one has utilities included.

If I'm paying $50/door in utilities, then I can probably only charge $25/door more in rent, compared to a similar separately metered property (that's an arbitrary number, but the point is you don't get as much of a return).  At the same time, tenants are turned off by paying a separate utility "fee" to the owner, as opposed to directly to a utility company.  Plus, feasibility is based on market conditions.  If no other similar units charge a utility fee, then your property is less attractive.

In addition, when there is a huge spike in prices, or you have a vengeful tenant, you're not stuck with the cost.  For example, I had a tenant mad at me because I sent her an eviction notice, so she turned on the water in the laundry room, stuck the hose down the drain, and let it run for a month.  She knew I would be the one paying for it, and there was no way to prove the extra $150 bill that month was due to her.