Anyone have experience with propane heating?

8 Replies

Currently looking at a 7 unit, split between two buildings on one lot, and it’s listed as having propane heating. Has any had any experience as a landloard with propane heating compared to oil?
@Mike Dorneman going over the P&L statements I received this morning, the seller currently pays for heating. I can see just how expensive it is and will be passing on the property as I would be barely break even.
@Sochima Eze Especially consider no this variable is such an unknown... you may have a tenant that wears shorts all winter long and pumps yhe heat to 85! You’re bill would be massive. Heating should always be tenants responsibility. Good luck

In Maine, it's very common for landlord supplied heat simply because heating oil and winters can be so unpredictable that both lower income tenants AND financially savvy blue collar tenants lean toward "heat and hot water included". We've generally been able to reduce heating oil consumption 40-50% once we buy a building (you have personally been the beneficiary of two of these instances, haha!). Maine has the efficiency Maine program, of course, which can reimburse for some energy upgrades. If you're going to continue to seek properties in Maine, I'd suggest making a note to check their website every so often. Right now they're just offering super low interest rate loans for upgrades. BUT these loans are special in that they can be passed on to a buyer (completely assumable, like they belong to the building vs. the owner). One thing that is cheap to do is to purchase Braeburn landlord thermostats. These are a little atypical vs. the standard "set at 72 degree" units. These have a special jumper that you can move, set the max temp, then move the jumper back. We have a couple of units where the tenant is older and we have the max set at 73 vs. 71 or 72. Another thing you can do is have your heating company put switches on the boilers to turn off the heat / power to the circulator pumps or zone valves that control the heat in the apartments. The prevents people who forget to shut their tstats off in the summer from using heat when a night dips below 70. It should pay for itself in 1-2 years we've calculated. You CAN have separate boilers (we have a 2 unit) but frankly I believe it's an inefficient way to go. The boilers will be "bumping into each other" and running much more than necessary. Better to increase the rent a little and have one boiler. Many landlords have one of two options for individual tenant supplied heat: Monitor heaters and heat pumps. I will be contrarian here and tell you that heat pumps are NOT READY FOR PRIME TIME as a primary heating source in the state of Maine. Monitors are not bad (propane or ng) but keep in mind ... with any "single source" heating idea, there will be challenges (one room cold, the other too hot, etc.) -- You mentioned propane. Anything that runs of propane should be easy enough to make run on natural gas, which is often a better deal. Summit NG will often reimburse you 50-100% for retrofits (we got all our money back for the two natural gas burners we put into the 11 unit you're familiar with)

My two cents! 

Propane is expensive . Usually the propane company owns the tanks , so they are the only ones who can fill them . And guess what , they get to charge what they want .   Here in Maryland thats how it works .  I have customers that one owns a oil company , the other owns a propane company .  The margins on oil are about 60 cents a gallon . The margins on propane are $ 1.00 a gallon to $ 3.00 a gallon depends on how much you use . 

With oil you own the tank and can call who ever you want . Not with Propane .  Oil has more BTU energy per gallon than propane . But oil furnaces require more cleaning and maintenance . 

Avoid investing in any income property that does not have all utilities separated and in your tenants name.

The last thing a landlords wants to do is pay for tenants utilities. Most are extremely irresponsible for utilities they do not have to pay for. Keep looking.

Propane gas can be cost effective if you find a good propane company you sign up and set up a total amount of propane that you will need for the year and lock it in at its cheapest price, you have it delivered when you are ready not vice versa. I get mine prepaid once a year.  I have a small trailer on land in the middle of no where and it is not insulated as well as it should be and it sits north south instead of east west and is on a hill.  All those are wrong.....but it only cost around 1600 a year to keep it heated. 

Most have to pay around 200 a month if you do not prepay it.