Estimating Water Sewer Garbage

[John Cook]

Happy holidays everyone! I'm curious to know if anyone has a method of estimating water/sewer/garbage for 2 bed/1 bath apartments. It appears that Sacramento is a "landlord pays water/sewer/garbage" city so if any landlords can share their tips on estimating this expense, especially when determining cash flow for potential investment properties, it would be most appreciated. Does anyone actually look up historical expenses per unit? is this possible?

[Wes Blackwell]

Hi @John Cook! Great question!

This isn't always actually the case. There are plenty of apartment buildings that push the entire cost of utilities onto the tenants. Ultimately, it's really just going to come down what the total cost is to the tenant compared to other units in the area. $1,000 rent + $500 utilities is the same as $1,500 rent and no utilities. It all depends how you want to package it.

If you're looking at apartment complexes, your real estate agent should be able to obtain this information for you to help you estimate cash flow, expenses, etc. But primarily this information should come from the listing agent and the seller. And you can simply ask them what they are or ask to see a copy of a bill (this would be during your due diligence period after an offer is already accepted and set to be negotiated further).

What I would do is start looking into some of the properties that are actively for sale and analyzing them and talking to the sellers / agents even if you have no intent to purchase. This will really help you understand the market and the available opportunities, which would allow you to more easily estimate the utilities costs for the properties. Think of it like "Look at 100 properties, buy 1."

If you need boots on the ground of the help of a local real estate agent to provide you with more information, just let me know. Best of luck!