Re-focusing on the goal
The last month has been a whirlwind of activity what with the rent issues, figuring out how the utilities are metered and just dealing with the tenants shock-and-awe at the new management. In addition, we have attended to the most critical repair issues which were; one roof, a gas leak, one property where the main electric line was off the insulators, dragging on the side of the house and fraying and a support beam under a tattered two-story duplex.
Now it's time to refocus on the goal of upgrading these properties a bit, going for 100% occupancy of PAYING renters then bit-by-bit doing the more major fixes we'd like to see done, for example, getting some support beams under saggy corners and guttering everything that isn't. For those of you who are kind enough to follow me a bit, really, guttering was a goal to start with!
While that sounds like a hands on proposition, today is all about spreadsheets and math. I will be recalibrating my monthly expenses/revenue now that I have actual utility bills for gas/electric/water and have learned who is likely to pay the rent. That will give me a more accurate estimate of available cash. Next step will be calculating how much additional $$$ is needed to get fully occupied in terms of advertising, fix up costs, carrying costs etcetera. My initial goal was to make this a profitable proposition with $30,000 including the down payment and legal costs. In the short term, I may be $5K off but I can easily see where the property can ''give back" about $15K this year so I may call that a net of 20K.
Where I really got off track was in utility deposits. Everything else has been largely as expected but because the other company is very mature, we rarely pay deposits. On these properties, we're paying often large deposits for all three utilities. For instance, I got all the water bills yesterday and they were over $1000. Once you back out deposits and advance trash billing, the regular bill is about $220. So, almost 3K just in deposits. In the end we will recover those funds but in the short term, they're coming out of the operating checking account.
Comments (3)
Ah, they don't do that here. You just pay as you go.
Dawn Anastasi, over 11 years ago
Dawn A. - I mean an actual deposit, just a landlord's security deposit. They are commonplace in our area and can be quite large, usually twice the anticipated monthly average bill. I was a little incoherent in my post... specifically, I am looking at an approximate total of $3000 dollars deposit for all utilities together. 10 water, 6 electric and 6 gas. As units get rented or moved of 'bills-paid' leases that will reduce to 10 water, three gas, three electic but still substantial cash tied up in utility deposits. Shortly after that, we will begin to explore separating the water meters. In addition to deposits, the water company charges two months of trash service in advance and credits that on the last bill.
Deborah Burian, over 11 years ago
When you say "deposits" what do you mean? That they request that you pay in advance?
Dawn Anastasi, over 11 years ago