Will this Neighborhood Tolerate RUBS or SubMetering?

[Tanner Gish]

Hey Everyone,

 So, question, as I do some due diligence on a 26-unit deal in Cincinnatithat isn't likely to go anywhere... for the following reason- the property is being murdered by its operating expenses (36% of it's GROSS operating income goes to paying for utilites). Seems like RUBS or submetering is the way to go. 

However, it is a C, C- neighborhood, with and unusually low rent roll (and, as I investigate Craigslist, Zillow, and apartments.com, the competition seems to have rents that aren't much higher). AND, it seems that nearly every available property comes with landlord paid gas and water (for those curious, my agent and contractor saw it's a safe neighborhood, spoke with the police captain for this District, and has been told it's safe, and has a strong Community Council and neighborhood identity- just low income).

 This tells me that submetering might drive all tenants out (almost all units on the rent roll are $25-125 below average rents, including the competition) and that even if I underprice the competition by $25-$40 or so, I'll likely loose to them (as the winter heating bill will easily eat that up.

So... probably wondering what the question is? Question is: are there any other websites, normal local resources (other than other investors at a local REI club who do invest in that neighborhood) that I'm missing out on checking what the prevailing norm is in terms of which utilities tenants pay? Second question- am I on the right track- move on, and leave this property be, if loss to lease, vacency, and submetering are the only value add plays, in a C class (not "hot and trendy") neighborhood?

-Tanner