How can I reduce property utility bill?

7 Replies

I made an offer on a property that is considered a boarding house. It is a small row home in Philadelphia that is broken up into three rooms. The only common areas are the bathroom and the kitchen and the backyard. The property is all electric. The electric is going to be in my name.  Hypothetically I would be collecting $1200 a month or $100 per week per room. Electric can range anywhere from 300 to 500 for homes of the size. There is no dishwasher. There is no washer and dryer. 

 Are there any absolute pitfalls to avoid when it comes to electriic?  Considering the entire house is electric any reduction of electric usage will increase my bottom line. Space heaters vs baseboard heat?   Should I avoid window air conditioners at all cost and opt for the new energy-efficient floor air-conditioners?   Instead of having one large refrigerator in the kitchen should I get three mini fridges for each room?! 

Hey Joe,

I would think window air conditioners would be your most efficient option, seeing as they can cool whatever zone of the property someone is in vs. the whole thing. Though if the inhabitants are not paying a portion of the bill they might not be inclined to try and conserve energy. A nest or other wireless thermostat might also be worth considering too.

James

Joe, 

I strongly recommend not relying on electric space heaters or electric baseboard heat if you are paying the utilities. They may be the most costly ways to heat a property. Electric resistance heat is more expensive than other alternatives. If it is in Philly gas should be available. If it is not and natural gas is not available then your best option is to instal a heat pump. The best way to explain a heat pump is, a central air conditioner that has something called a reversing valve that diverts the refrigerant so during the winter months the inside coil is hot and the outside coil is cold. In the summer it runs like any other central air conditioner. It will only maintain heat down to 30 degrees outside that it will have a electric heating coil as a backup for very cold nights. Here is why they are awesome... Everyday above 30 degrees you are saving money because you are not burning fuel or "creating" heat. You are just "transferring" heat. They have a COP of 3 or 4:1. What does that mean? It means for every dollar you spend on fossil fuel or resistance electric heat, YOU GET 4 TIMES THE AMOUNT OF HEAT OUT OF THAT SAME DOLLAR. If you put one in you can put a $120 Honeywell 8000 WiFi thermostat in and lock the screen and control and monitor the inside temperature from your phone. If you ever have any questions about this kind of stuff feel free to reach out because I specialized in commercial refrigeration, heating, and air conditioning for 8 years before moving on to something better.

Good luck!

Jonathan 

You can also zone it out, but it will not be worth the up front cost because you are paying the bill for the entire property anyway.

@jonAnderson- there is natural gas but the previous owner capped the natural gas line. In order to utilize the natural gas I would have to rerun the gas lines and possibly buy a new furnace which are all added expenses that are not needed. I like the simplicity of having everything electric. In Philadelphia it's not like the electric is five times as expensive as gas there are homes that have very high bills when utilizing gas heat. 

This heat pumps are they compared to those ductless AC systems? You have an outside unit in the backyard and you have a couple heads inside the property?  In the summer those heads blow cold and the winter they blow hot?

Hi Joe,

The good news is that electric is relatively a cheap utility.  Also, you could shop electric providers to determine if you can get a lower rate.  One other thing you may want to consider is to switch all appliances to energy efficient models, switch light bulbs to CFL or eco-incandescent bulbs.  Small changes at a small cost will save you dollars and add to your bottom line.

If the electric is on your dime , as a tenant I would be very cool in the summer , toasty in the winter , and long hot showers after a hard days work .

Joe,

Ductless heat pumps can have up to 8 indoor units connected to 1 outdoor unit and are super efficient. I priced out what it would cost to zone out my personal home with a ductless system. For the outdoor unit, 6 indoor air handlers and other supplies (cable, copper,etc), it was over $7500 in supplies alone. 

I installed a regular heat pump instead with a 20KW electric coil for emergency heat. That cost $1500. Now, I did the labor so that is why it was under $2000 for everything.

As far as a cost comparison between electric and gas, electric is WAY more. Over time, using natural gas will hands down save you every single month!!!

Example:

Heat is measured in BTU's

Electric baseboard or space heaters      $35.13 / per 1,000,000 BTU's

Natural Gas                                             $10.02 / per 1,000,000 BTU's

It is 3.5 times as much multiplied by every month you are paying to heat the property.

Here is a free calculator offered on the Department of Energy's website:

http://www.eia.gov/tools/faqs/heatcalc.xls

I just wanted to make you aware of your options and any necessary information before taking on that monthly expense.

Also, with a central system, you control it (WiFi Stat). You will not have it set to 65 in the summer and 78 in the winter.

Lastly, gas line is very cheap to buy, black pipe is super cheap, but flexible gas line is super easy to run ( Gastite* or TracPipe* are the two main manufacturers). Do not let that deter you from paying 6 times more a month. Going from electric to gas alone will save you 350%, add in the fact you can control the heating and cooling from your smartphone for an extra $150, that could be another 300% savings.

I hope this helps,

Jonathan

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here