Don’t Let Water Eat Your Profits

It’s not news that we are experiencing a water crisis in California. This has a direct impact on investors of duplexes, triplexes and fourplexes and it’s important to know what is the impact and how to avoid it.

New investors may not know this, but it is very common for the owner of San Diego 2-4 units to pay for all the water utilities. This can be a devastating profit killer if your tenants are abusing water usage or if severe water leaks exist in the plumbing. It’s important to be cognizant of these costs and how to mitigate them. The graphic below illustrates this problem and offers some solutions.

Aside from identifying methods to decrease water use and leaks, there are ways to avoid costs entirely. Some investors are able to transfer costs of the water utilities to the tenant. They do so in a variety of ways:

1. Invoice the tenants every time the water bills comes in, split amongst the number of units. This is typically easier to do for duplexes, but owners are able to do this as well for triplexes and fourplexes.
2. Add a water fee to the lease.
3. Negotiate a water abuse fee to apply if the water bill is excessive.

• The downside of doing any of the above is that it can hurt your ability to attract tenants. Many tenants will expect the water bill to be part of the lease or will compare your lease with other San Diego apartments that do not charge a water fee. Please note: It’s important that you ensure any extra fees be done correctly and compliant with landlord/tenant laws. You may want to consult a real estate attorney before enacting any fees on your San Diego duplex, triplex, or fouplex.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For further discussion or help with the purchase or sale of your property, please don’t hesitate to get in touch. Thanks!

Information gathered from Sandicor. As always, please note our disclaimer.

LAWRENCE DY