All Forum Posts by: Account Closed

Hi I am looking for a plumber or contractor who has experience performing a leak/water usage audit on rental properties. I have a 16 unit building in mass close to Framingham. Please get in touch if you know anyone! Thanks

Hi everyone,

So I'm a young investor and I have a 16 unit building 30 minutes outside Boston. They are one bedroom units but they are small one bedrooms... I think they are around 550 sq ft. The currently class of tenants in there is probably around a C. A few of the units have been updated and look pretty solid, but most aren't that great looking. My avg rent is $832. One that I fixed up nice got $950 for a year but now is down to $900. My question is this: with that small a space, and this class of units what should I do with the the building? Should I just maintain the units as needed to make them solid or should I renovate the vacancies as they come up and make them alot nicer and try to ask for more rent? Are the units too small to try to do an overhaul on the building and tenant class?

I currently have 2 coin OP machines in the basement- I could probably stand to get another set down there with 16 units. I have gas heat.

I'm going to check every unit for obvious leaks. I also spoke to the water/sewer foreman. It sounds like I have 2 options:

1- I can put in a new 2 inch digital meter,which can download data on amount of usage, exact time of day, and constant stream of usage to automatically detect leaks (cost of a few hundred dollars)

2- I can install individual meters for ever unit. MA apparently just passed a law that you can pass on excessive water/sewer use to tenants if you have individual meters. And this way I can see who the problem tenants are. Only issue is the meters could be around $200 each. So I'd be looking at over 3k plus the price of a plumber to set them up for install.

Does anyone here know around how much the plumbing end would cost me to put in those meters? Has anyone here done this is MA before? I plan on keeping this building for at least 5+ more years. Is it worth it to do this kind of upgrade in MA. on a building such as this?

Ann, thank you for such a detailed response. I'd love to get to the bottom of it. I'm assuming I certainly have multiple people living in some of these 1 bedrooms but I don't know that would be enough to account for this. Could simple drips cause this or would the leak have to be large? Are there people who handle a usage audit like that and how much do they typically charge? Should I still attempt to follow up with the town?

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my last bill is a 93 day billing period- Water CD reading is marked "actual" and read at 116,700 (previous was 85,100) usage says 31,600 Sewer CD reading is marked "other" and present and previous are blank- usage is marked 31,600 ... so usage for both is marked exactly 31,600.. does this mean its an estimate? I'm confused. The charges for water is $1442.49 for water and $4,813.33 for the sewer for that quarterly billing period. The town tells me the meters are working fine and not to worry. Here is ashland's new rates [URL=http://image.torrent-invites.com/view.php?filename=398photo.jpg][/URL]

joel- It seems as though most apt's in the area include heat and hot water... my real expense is water and sewer (I'm getting hit for over 25k a year).

Steve- My basis is I think 950k in the property- so In this market im not even sure its worth quite that- so I don't think I'd have to worry at all about a 1031 at this point... I guess my next real question would be about strategies in terms of finding a good deal with a good cap rate in a commericial multifamily- and If buying in the same area would be worth not getting the best cap rate for ease and continuity in my management and team of people I already have set up. Also what kind of interest rate could I expect on a refi... i'm only showing about 60k a year in income

Chris- I currently pay heat and hot water but not electricity. I don't find in ma I see tenants paying for heat or hot water much, in any case if I separated those how well would tenants transition? Should I expect some people to leave? What about people with leases (I have a few maybe 4) can I not change it on them? My largest expense is water and sewer through the town, I never seem to see tenants paying for that in Ma. Here in Texas renters typically pay for everything - all utilities- water, heat, hot water ect. If I do go that route who do you contact to change it and how much will it cost? This is for heat and hot water or also the water sewer (am I even allowed to make tetanus pay the town direct for that?)

As far as pulling money out won't it be hard to find a rate at 5 for a commercial loan? Also if I buy in Texas and I leave eventually I'll have to hire a management company to handle everything because of lack of connections down here-won't I lose a ton of NOI being "hands off" ? Mass seems to have much lower cap rates on multiplexes then Texas - I see 10-13% down here possible but only 8-9% in mass.

I see I guess I misspoke on the 1031 my basis is higher or about equal to what I might hope to get now- I guess I meant should I look to buy something larger?

Kris- it's Ashland area - downtown location- mile from commuter rail- 6 miles from rt 9- 30 min to Boston- the apartments are in pretty good shape - some more updated then others - the tenant quality is a C at best... but the units are small 1 Bedrooms so I've been hesitant to put too much work into them other then general maintenance... For point of reference there are 2 bedrooms 1 baths next door going for 1150-1250 some are updated some aren't and also 2 bdr 2 baths in a brand new building down the street renting at 1350+