All Forum Posts by: Nicholas W.

Here is HUD's definition of a service animal and how to apply it to rental properties. Obviously this is HUD specific but it's a safe bet that your state doesn't stray too far from the HUD definition and guidelines.

https://portal.hud.gov/hudportal/documents/huddoc?id=servanimals_ntcfheo2013-01.pdf

I live in the Milwaukee metro area and we have a lot of houses on a well, my primary residence being one of them so here is my fairly well informed opinion on them.

Being on a well isn't a huge issue in it and of itself. The cost replace a well pump is usually around $1500 with labor and they have a life span of 10-20 years so it isn't a overly significant cost. The well pump isn't the only thing that can go wrong though. A well pump system also has a pressure tank (usually in the basement) which has pressure reliefs and cut off's that can fail. The tank itself can also fail and has a life span of 10-20 years also. The cost of a pressure tank replacement is usually $500-750. There also is a lateral supply pipe from the well to the house which can fail, this cost varies significantly based on the where the well is in relation to the house. The biggest concern with a well is that it can run dry or go bad in which case you have to either drill the well deeper or drill a new well. The cost of this can be vary from a few thousand to tens of thousands.

Like I said the well itself isn't a huge concern, and is something that can easily be accounted for in your capex calculations. The reason I won't purchase a rental property that is on a well is because in almost every case it also has a private septic system. This can be a major issue and come with significant costs. Private septic systems must be properly cared for. Of particular concern are famine products, condoms and plush toilet paper being flushed down the toilet. These can cause catastrophic failure of the leach field. Sending certain cleaning products and bleach down the drain can cause chemical imbalances in the septic tank that will also cause issues. If the leach field fails the system must be replaced entirely and because of new regulations this typically requires the installation of a mound system. This is assuming there is even enough land on the property to install a mound which has to be located in a different spot than the already failed leach field. A new mound usually costs around $15,000. If there isn't enough land then you must install a holding tank which must be pumped out usually every 2-3 months at a cost of $100-200. Speaking of pumping the tank even with a traditional or mound system most metropolitan municipalities require that it be pumped every 2 years at a cost of approximately $200-250. Passing this cost on to tenants would be difficult and generally unethical except in the case that they were in place during the entire 2 year period. It might be possible to prorate such an expense but would be much easier to pass this cost along in a slightly higher rent payment on the basis that there is no water/sewer bill.

For all these reasons I refuse to buy any rental property with a private well and septic. It won't command any higher rent but will significantly affect your capital expenditures. These added expense can be accounted for but that doesn't change the wild card of hoping your tenants don't ruin your leach field.

I've had good luck with Chase Ink and the cash back is a nice bonus too.

Go power vented for the water heater. If the installation cost was equal for both it might be worth going with the electric but with the installation costs offsetting the higher material cost I'd say it is worth it to go with the power vented. Not only are gas water heaters preferred by buyers because of their lower operational costs but you won't be adding another high load to the electrical panel which I'm guessing is only 100 amps.

I am by no means an expert have a good understanding of lending practices. 

If you have no w2 or self employment income a lender will probably look to your schedule E tax filings and use any profit as income to qualify you for a loan. If you happen to be in a position where your rentals are your sole source of income you are not likely applying for conventional mortgages because you have too many already or are dealing with larger multifamily properties. In that case you're into commercial financing where lenders aren't nearly as concerned with your personal income and much more concerned with the asset in question.

I know nothing about Massachusetts but in Wisconsin landlords are required to exhaust all means to mitigate the tenant's losses in cases like this. Basically meaning the tenant is still on the hook to pay until the end of the lease term but the landlord must diligently try to fill the unit as quickly as possible and can only bill the prior tenant for the days leading up to the replacement tenant's lease beginning. It is illegal to just keep the security deposit or bill them for the full term of the lease unless of course you can't fill the unit for some reason after making reasonable effort.

I know other landlords have a different opinion on this and I understand that, but I really feel that there isn't a truly fair way to do it. You could do it per person, per bedroom, per square-foot, or just split it evenly but none of them will be truly fair. Even if you do it per person what if the single person in the garage apartment likes to take a bath every night or even really long showers and washes their car every week and the family of four in the house takes quick showers in an effort to lower their water bill. If you really want to be fair put a utility meter on the garage apartment. Being that the garage is separate it won't be hard to separate but still maybe costly depending on how the water mains are run. You'll have to eat the cost but I think the only other fair way to do it is for you to pay it and raise rents. 

Another option might be to put a flow meter on the line running to the garage and prorate the bill accordingly. The trouble is you would have to personally check the meter every quarter.

I would chock it up to a lesson learned. Put something in your rules and regulations that "only dishwasher specific tablets maybe used in dishwasher." Then if you ever run into this again you can point to that and say if you used the tablets as specified you couldn't use the wrong soap or too much.

What about a refi and then rent? You a chunk of your investment out and you still have the rental for long term. Your cashflow will take a hit but you'll have much less cash in the deal and I bet your CoC return will be better than if you just rented it out with the current financing in place.

 No, if I read correctly it was stated earlier in this post that they will be added to the basis of the property and depreciated just like all other make ready costs prior to a property being put in service.

If you purchased the property in November are we really talking about any significant sums of money? I would think the property taxes and mortgage interest would only add up to a few hundred, maybe a thousand dollars. I realize every little bit helps, but this doesn't seem like something to sweat too much.