Whenever I first sit down with someone thinking about buying an income property (either to live in or as an investment), I ask them a question:
What, besides mortgage and taxes, do you think is the most expensive thing for a landlord to pay for?
I get all kinds of interesting answers…things like water, mowing the lawn, painting. All of which are wrong.
Come on, confess. There was a point at some time in your life (probably college) when you lived on the top floor of an old building, it got hot in your apartment and you opened the windows. In January.
You weren’t doing it to punish your landlord. Well…maybe. More likely, you were young and simply didn’t understand the relationship between the open windows and the amount of your rent.
Of course, as soon as you bought your first home, you set the thermostat at “arctic” and decided that old, warm Norwegian sweater in the cedar closet was actually timeless and never out of style.
When evaluating a property to buy, it’s important to keep those little life lessons in mind. Given two equal properties, it’s always preferable to buy the one where there are separate furnaces.
That doesn’t mean a shared heating system is necessarily a bad investment. It just means that since the property is going to cost you more to own, it’s wise to purchase it at a lower price.