Splitting Utilities

Rehabbing, Fix and Flip, Rental Properties
1

Hi Guys,

I’m getting ready to rehab a 3-story row home into 3 seperate apartment units. Since I’m pretty much gutting the whole building, I have good access for running pipe, wire, ect.

But as far as services entering the building:

Does anyone have any experience on having, lets say for example, the gas company, split up the incoming service into 3 seperate accounts? Or maybe electric? Or what about water?

Any thoughts on this would be greatly appreciated!

(to split or not to split, that is the question)
-Dan

2

“To split is the answer”

I wouldn’t bother with the water though. Most towns like to bill YOU and FINE YOU for the water bill the tenant didn’t pay. So I pay the water bill. NEVER pay the tenants other bills though. I stay as far as I can from that. I know MANY landlords who have gone under JUST from this. Many houses, gas or electric rises by 25% overnight. Thousands more in your bills in just one month. BUT THE RENT DIDN’T GO UP. And if you jack it it you couldn’t rent it as it would be OVER the going rent in the area. Huge problems and they ALL start falling like dominoes. A few houses sucking every penny of profit out of the others. Then the mortgages stop getting paid and you can kiss your A** goodbye.

But if I was you I would STRONGLY reconsider completely “gutting” anything unless you have already made the mistake. I buy houses that are completely wasted and NEVER gut. I also see many landlords go under from Gutting a place! And ask me to bail them out and buy the Gutted building as if it is worth more now that they screwed it up. Please don’t watch these fools on the flipping shows as if they know what they are doing.

Those of us who do, DO NOT GUT ANYTHING! If it has huge holes in the roof, put another roof on it. Floors of broken out plaster or sheetrock where it rained for years. Cut it out with an angle grinder and a concrete cutting wheel! Patch in sheetrock where needed ONLY. If paint is peeling off the walls everywhere, spend a few days scraping it off and smoothing it out as good as possible and then spray a knockdown or orange peel texture on the walls. It will cover LOTS of damage or bumpy walls. And you will have a nice old world look with the knockdown.

Just think hard about this before you gut the place! Sometimes I will tear out 1 ceiling that is completely wasted. Or 1 bathroom wall if I have to replumb it. Etc. Think of this as a rehab, not as if you are doing new construction. A complete gut will suck every drop of profit you have out of it. Rehabs are the smart way of doing things. You wouldn’t get much more of a sales price IF ANY on one of your almost all new construction guts than my rehabs which come out beautiful.

3

I just split the electric on a rental (saving over $700 a month once it gets re-rented). It cost $4200 including day labor, I did the wiring with the help of 2-3 guys a day.

For the electric, they will pull the wire up to the pole, and then you have to install new meter bases, breaker boxes, etc.

Since I had the gas disconnected, and switched everything to electric, I don’t know how they do the gas lines. I would imagine the gas company installs a second meter for a fee?

I did gut a house once, and I’m not sure I agree with Hooch. It is much more labor and material intensive to run new utilities through existing walls over walls that are stripped down. I did the drywall work myself though, so I don’t know labor costs associated with it. I do like his idea of only tearing down the walls you absolutely have to. You may be able to run plumbing in just a few walls, and electric is much easier to route though existing walls.

Good luck.

4

I did gut a house once, and I’m not sure I agree with Hooch. It is much more labor and material intensive to run new utilities through existing walls over walls that are stripped down.

Most often kitchens and baths back up to eachother. Tear that one wall down between. Rebuild a “wet wall” from 2X6’s and run all of your plumbing through that wall. Same with the unit above. Run your electric out of both the attic and the basement off the separate meters. Trench in a few areas for your minimum of 2 outlets per room (code here). So one trench running down the wall directly over an outlet in each room and one running horizontal to the other outlet. Or if it is on the other side of the room deal with it from the attic, fish it through a ceiling you had to rip out and down the wall, etc. In most rooms you won’t have much damage to repair.

So that’s two thin strips of sheetrock that you have to replace between a couple of studs. Not an ENTIRE house of it including removal. I can assure you it is significantly less time consuming and costly repairing a couple of strips than gutting an entire house. Try it on one flip and you will agree. Spraying the texture is the additional step you have but everything doesn’t have to be finished to the degree of a standard flat non textured wall so you save tons of time in labor here too! And you can easily texture a house in a day.

Sometimes I want to change the floor plan and blow out another wall to make a large room or something. No big deal. But I will cut a nice straight line with my angle grinder at the end of the wall if it is plaster so I don’t damage anything more than what I want to.

I did the drywall work myself though, so I don’t know labor costs associated with it.

Also the labor costs of removing it and dump fees! Not cheap if you even have a jackleg do it. Also, on occasions I would do the entire house myself back in the day when I needed that sweat equity. BUT, I don’t work for free. MY time IS worth money. So I don’t write it off as if it wasn’t an expense.

5

Hi Dan,

       I don't know that anyone has actually answered your questions?

First, I hope you are drawing a full set of permits for this project and complying to building codes because to modify utilities a permitted project is mandatory.

Electrical, a location has to be selected on the building to place your “Weather Head” and locate a panel, keep in mind your utility company probable wants “Disconects” at the meters because your “Panel Boxes” (Breakers) will be located inside each unit.

You must select a location for your panels which is “Accessable”. The building code is very specific on the width and access. (Spacing away from windows and corners)

Then you have to go into your building department with your electrician and get approval for the locations. Then your electrician will coordinate with the electric utility to set up your main meters and disconnects, and weather head. (Done by your electrician) then your utility company will bring power to your weather head and “Energize It”!

Then your electrician should be able to get a partial panel box (Breaker Box) inspection and give you a couple of “Temporary service” plugs in each unit.

Gas service is different, because of the BTU’s neccessary to heat water or run a HVAC unit, the main line may have to be replaced back to the tap at the street to increase the size of the main line to allow a certain gas flow for all the gas appliances to be used on site.

Don’t forget with gas that all your old flue’s and vent pipes will have to be replaced to current codes. Gas company will handle a new main line, and meters at your expense, your plumber connects to the union on the outlet of the meters. You and your plumber will have to meet with the building department and gas utility company planner.

Now I like to gut most properties older than 1958 or so, most older properties have knob and tube wiring, they were plaster walls with cracking being prevelant, most waste and drains were cast iron or clay, water lines were galvanized and heating and cooling systems are insulated by asbestos based insulation and very inefficient.

Yes, there are circumstances when gutting a property is cheaper and easier to do that to try to repair major damage or trench and repair to replace utilities. You just have to understand when one makes sense over the other.

Good luck,

             GR
6

What made you think that he didn’t want to do the plumbing and or electric himself? I usually do.

Yes, there are circumstances when gutting a property is cheaper and easier to do that to try to repair major damage or trench and repair to replace utilities. You just have to understand when one makes sense over the other.

List them please. I buy condemned property and often get a large multifamily house for 5K or less and I haven’t run into a single one that would have been faster or more cost effective to gut. Maybe that’s for the 1K property. :rolleyes

7

Hooch,

      First I have a professional background in Construction Management / Project Management and now am entering my 31st  year of experience.

I have held contractors licenses in 12 states as an engineering and building contractor including California.

In the US today municipalities will not, I repeat will not allow anyone other than a licensed contractor to handle changes to electrical or gas service.

The Fire / Life / Safety issues are huge and liabilities are many!

I too am very capable to re-wire a home or run new gas piping, however this is within the boundries of existing service’s, when you go to change weather heads, change meter housings and disconnects and change panel boxes you will find if your doing it as a permitted project the city county and state require a licensed professional contractor.

The same thing goes for gas service, you and I are not qualified to make taps on a live gas line, we are not legally able to make service runs to a home, it must be done by a gas service company and a licensed plumber.

Go ahead and run in and tell the city your sizing, designing and installing service, see what they say?

I will make Gutting a seperate subject!

8

Well, I am planning on doing electrical and plumbing myself…But only AFTER the different services have been professionally installed at the entrance of the building. Once installed, I’ll step in and continue from there. …Messing around with electical weatherheads from outside? Nahhh, I’ll pass!!!
Thanks for the posts

9

In the US today municipalities will not, I repeat will not allow anyone other than a licensed contractor to handle changes to electrical or gas service.

YES, to their equipment ONLY. BUT every single thing in the house can be done by the homeowner! ALL wiring, All gas lines, etc.

I too am very capable to re-wire a home or run new gas piping, however this is within the boundries of existing service’s, when you go to change weather heads, change meter housings and disconnects and change panel boxes you will find if your doing it as a permitted project the city county and state require a licensed professional contractor.

I CHANGE MY OWN PANEL BOXES, I GET PERMITS> I AM NOT A LICENSED ELECTRICIAN! AND I CAN LEGALLY DO IT! The ONLY part that the electric company messes with is their line off the pole and the meter base. THAT"S IT! The ONLY part that the gas company messes with is their meter. THAT"S IT!

Go ahead and run in and tell the city your sizing, designing and installing service, see what they say?

I don’t get NEW SERVICE TO the house. It already has service. I AM NOT BUILDING HOUSES. I UPGRADE it’s service. AND IT IS LEGAL FOR ME TO DO IT!

10

Gold River,
Also, if you wouldn’t mind, what about one’s options for heating/cooling each unit?
What are your thoughts on installing electric baseboard heat, gas-hotwater baseboard heat (common in these old rowhomes), and a new HVAC system? I’m thinking that a new HVAC system would be the best option, but also the most expensive; and electric baseboard heat the least expensive/hassle-free???

Thanks,
Dan

11

I second the guy who said make the tenants pay the utils! I have now submetered all of my rental units natural gas for heating and we divide the cooking and water heater evenly. Had too with rise in gas costs and tenants leaving heat on 90 in the middle of winter then leaving for work with heat on high and the sliding patio glass door wide open completely!! Seriously, numerous tenants caught and evicted one to set and example, last fall we submetered. Saved a ton, but did incur some vacancy loss increase.