All Forum Posts by: Matthew Brown

I would call the utility company to get past historical usage for your estimates. Then bill in arrears or have the tenant set up those utilities under their name with you as the backup for default in the case of non-payment (this way you get notice and can prevent utility shut-offs).

You should be able to reach out to your utility companies and ask them for what the average bill has been for the property.  My utility companies will share this information.  As for how you bill them - me personally - I would make them a part of the rent and maybe pad them by a little bit just in case average isn't average across a year.  Sewer and trash where I am at are included in property tax bills...but maybe a NJ landlord can speak to that if it is not the case there.  The problem with trying to bill them separately each month is that what if you have one little old lady in one unit, and a family of 6 in another?  Water will be 6x different between the units, etc.  Now you get into trying to subdivide based on occupancy, etc.  By making it a part of rent, and adjusting it each year if rates change, you don't have to fight those battles.  There are companies that sell technologies (flow detectors) that measure how much water goes through the pipes that just bolt onto a pipe... but you are talking about spending a chunk of money to do that.  I wouldn't think it was worth it?

All the best!

Randy 

@Matthew Brown

Hi @Matthew Brown I do not see your calculations anywhere but right off the bat Airbnb?   Are you thinking guests from or going to Airport? MTR are becoming more and more powerful in these markets, urban areas like Essex, Union, Hudson county can be a little more strict with Airbnb laws but it all varies town to town.  

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This property is in Elizabeth City, NJ; it is an off-market property with three units currently occupied; there is a 4th unit that I will convert into an Airbnb. I have gotten pre-approval for a loan for this property. Any advice would be helpful as this is my first deal. 

Thanks!

Is $8,000 on a long term lease or are you thinking short term rental? If it's short term, I think you'd need to at least double your vacancy rate. This would be reflective of occupancy rate: If your occupancy rate (based off of AirDNA) sits at 77%, that means vacancy should be at around 23%. $8,000/30 days = $267/night. At 77% occupancy (23 days average), you'd have to be renting at $348/night to gross $8,000. Plus you'll have maintenance expenses that I don't see in your calculation (your expenses look like you're leasing long term). Is this a duplex? We need an address! :)

I think your numbers are off. But that's okay, this is practice, and you're new. Keep running numbers, do more research in your area, become an expert. You won't get it right all the time, but you want to be close and you need to know how to pivot or be creative with properties to make them work. Post another x5 more of these next week, it's only going to make you better at analyzing.

Thank you for sharing!

gotcha, that is better although the data I pulled shows 4000 at the very high end. Both units are 3/2? I'd dig a lot more  on that. Rentometer has 2 beds in Palisades park at a median of $2150 and 3 beds at a median of $3800. I'd believe them before BP.

Are the utilities separated? I don't believe water sewer can be charged to multi tenants in NJ but I could be wrong. Common meter? Check what taxes would be at the purchase price not the current evaluation.

Not trying to be negative, though it may sound that way, It may be a great deal even with all of the above. just seems a little too good to be true. Good luck.