Carlsbad, CA · Member since 2016 · 77 posts · 25 votes
10 unit in Cleveland, OH. Only 5 tenants and gas bill is $700/month. Is it me or is that high?
What change/upgrade should I do to reduce this bill other than charging the tenants a "utility bill"?
Any help/advice would appreciated.
Thanks,
Tim
Real Estate Broker · Cleveland, OH · Member since 2015 · 255 posts · 248 votes
9y
@Tim W. if you have a boiler heating up this place, as many smaller Cleveland apartment buildings do, you'll run into higher heating costs and gas bills.
$700/month - $70/unit - $140/occupied unit.
If that is the case, you may want to increase rents (heat included) or consider your options of separate gas meters, furnaces, etc. Good luck.
China, ME · Member since 2014 · 3k+ posts · 4k+ votes
9y
What in the world are they using $140/month in gas for this time of year? Just hot water? Or is it possibly a quarterly bill that includes heat in April and May?
Are they doing laundry for family, friends and neighbors? Heating a hot tub?
I think the first order of business is to make sure you know what all that gas is being used for. Then, see if your bill really is out of whack, though at first glance, it seems awfully high.
Real Estate Broker · Cleveland, OH · Member since 2015 · 255 posts · 248 votes
9y
@Tim W. if you have a boiler heating up this place, as many smaller Cleveland apartment buildings do, you'll run into higher heating costs and gas bills.
$700/month - $70/unit - $140/occupied unit.
If that is the case, you may want to increase rents (heat included) or consider your options of separate gas meters, furnaces, etc. Good luck.
Carlsbad, CA · Member since 2016 · 77 posts · 25 votes
9y
Charlie MacPherson
I thought the numbers were high as well. I had it chalked it up to broken windows, which were are in the process of repairing. The boiler is about 16 years old and I'm not sure if theres a more efficient modern version that could help the numbers. I was trying to see what other investors' experiences were.
Carlsbad, CA · Member since 2016 · 77 posts · 25 votes
9y
Chris Martin that's the monthly bill. There was an inspection done before we purchased the property but nothing out of the ordinary. I believe the description was "marginal" condition for many of the heating components. We are leasing the laundry machines and the dryer is gas but I'm not sure if that would be a large factor.
Carlsbad, CA · Member since 2016 · 77 posts · 25 votes
9y
Jad Boudiab
Your description is spot on. I was hoping for a different answer, like "your numbers are way off." From what you're saying, I will have to invest or look for alternatives seeing that we are already raising rents.
Investor · Canton, GA · Member since 2014 · 727 posts · 500 votes
9y
Are you sure they did not hook up to the neighbors or something for some cash?
That seems very, very high for June. What will it be in January, $4,000.00? Something is not right here.
Real Estate Consultant · Camarillo, CA · Member since 2010 · 2k+ posts · 1k+ votes
9y
@Tim W. how long have you had this property, and why did you not know about high gas costs prior to closing? The utilities should have been part of your DD process.
Carlsbad, CA · Member since 2016 · 77 posts · 25 votes
9y
Tony Gunter to my knowledge, there is no funny business. I guess that was my reason to ask around to see if anyone else encounters this. From what Jad Boudiab mentions, it appears more common in Cleveland, OH.
Carlsbad, CA · Member since 2016 · 77 posts · 25 votes
9y
Jeff Greenberg
We closed on the property this past Feb. My understanding was that the previous owner did not make his real estate portfolio a priority (he used it as a write off for his other businesses). A lot of deferred maintenance throughout the entire building. The idea was to rehab and raise rents and potentially add a utility fee in the future in order to offset the gas bill. My main thought was high gas costs due to the deferred maintenance (broken windows, older boiler, dryer...) Nothing came up during inspection. I'm definitely concerned and further investigation will need to happen regarding that expense.
10 unit in Cleveland, OH. Only 5 tenants and gas bill is $700/month. Is it me or is that high?
What change/upgrade should I do to reduce this bill other than charging the tenants a "utility bill"?
Any help/advice would appreciated.
Thanks,
Tim
I would check first to see if the bill was estimated, perhaps they misread the meter, or had several months where they didn't have access to the meter and misread it.
If that doesn't work, I would check for leaks on your side of the meter, fraud etc. There is no way your bill should be high, Natgas is practically free in your state. And there shouldn't be much demand in the summer. Maybe a little hot water, or laundry but that's really it.
Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
9y
Do you know what the gas usage is measured in "therms".
I have a duplex and in the last month, hot water was 35 therms (2 unit). Cooking gas for one unit is 6 therms. That's one month May 26 to June 26.
Comparing bills is a little more difficult because of differing rates, and my utility has a service charge for supplying gas to cover their administrative cost. The 6 therms of cooking gas includes a $21.91 service charge, with a total bill of $30.88, that's 1 3BR apartment for one month.
I'm in NYC and we were complaining our rates are one of the highest. Find out from the utility what the typical usage is for an apartment.
Rental Property Investor · Toronto, Ontario · Member since 2012 · 538 posts · 298 votes
9y
Tim,
A couple of points;
The level of occupancy will not affect heating costs a lot. The system has to heat the whole building and even if you to 'isolate' the non-occupied units, the heat will still migrate there via air flow or simple conduction. You might save a bit but you have to keep the water pipes flowing!
You mentioned that the furnace is ~16 years old. With a 10 unit building, you are, I suspect, at the higher end of residential boilers or the lower end of commercial boilers. At that time (~2001) those boilers were realistically 70-75% efficient realistically (or worse so forget about what their rating is) even with annual maintenance / cleaning of the burners. 'Modern' boilers are rated at >90% efficiency and do operate within a few points of that. As well, most current boilers are multi-stage so that in the shoulder season (Fall and Spring), they only fire up some heat as needed vs. all the burners at once.
I suspect that your current boiler is probably throws out 250-300K BTU (should be stated right on the side). If you get a good company out there to actually figure what what you need, just based on the higher efficiency, you can probably get it down to between 175-225K BTU which would save you 10, 20 or even 30%. The payback with a new furnace will be several years but if you are a buy and hold type owner, you also get some warranty and hopefully reduce breakdowns.
Use the summer to get educated and then in the fall, get some quotes.
Carlsbad, CA · Member since 2016 · 77 posts · 25 votes
9y
Bart Hedgcock the reading was an exact reading. The months fluctuate a lot. April and May were mid$600 and low $700 respectively. I'm leaning toward calling the gas company and see what their historical prices for this type of property run and go from there. I want to think my tenants aren't criminals but we'll have to see what the gas company says is typical "norms".
Carlsbad, CA · Member since 2016 · 77 posts · 25 votes
9y
Oren K. The picture of the boiler from the inspection report says output 500k btu/hr? From what you're previous post is saying, would this boiler be overkill? Would replacing the boiler with something more modern be more economical or is there another alternative we can consider? Or should I leave that up to the next owner?
Colorado Springs, CO · Member since 2016 · 45 posts · 10 votes
9y
90% efficient boilers are something you should look into. Upgrading could also get you a rebate from your local utility company! I know here in Oklahoma I can get a $50-100 rebate on residential water heater and by switching from electric to gas heating I can get $500-$1000 rebate. Look into upgrading your boiler find a good HVAC company to inspect what you have, you could have a hole in your boiler and it not making temp and cold water coming in to make up what is lost. How's your water bill, is it outrageous too? All your heat could be literally going out the flue. Also, insulating is a good idea. Good idea that you're already replacing windows, but look into how your roof or attic is insulated. Adding insulation usually gets you rebates from local utilities as well. Go to the Energy Departments .gov website, there should be info for rebates on upgrades there.
Minneapolis, MN · Member since 2017 · 10 posts · 9 votes
9y
The local gas or electric companies may have efficiency programs that will look at how the building is operating and recommend solutions, usually called Tune Ups or Audits. Payback on boiler replacements can be 10+ years, but you might be able to change the controls on the existing so it's not using so much in the summer. If should be able to turn off in June unless it is also heating the domestic hot water.
Rental Property Investor · Toronto, Ontario · Member since 2012 · 538 posts · 298 votes
9y
Tim,
Not sure if it was overkill or just what they needed to do with the equipment available at the time.
For my 39 unit, ~39,000 sq ft building, I have 2 x 399K BTU (total ~800K) with 5 stages each which were put in 3 winters ago. I saw substantial savings in gas (don't have the number at hand) and have not had to do more then basic maintenance / annual inspection. For next year, since heat rises, I will look into creating control zones so that upper floors do not get heat if they do not need it. The way it was piped, as built, may not allow for this but worth checking out.
Get a (some) good HVAC specialists in and get educated over the summer so you can make a decision before next winter.
As to leaving it for the next owner; your choice but for ever $1 you take out of operating costs, you get back $10 on sale (assuming a 10 CAP). If you intend to hold, the payback is slower but still there.
Enfield, CT · Member since 2017 · 73 posts · 26 votes
9y
As a licensed hvac contractor from ct. I would recommend first and foremost finding a good service company in the area. Having them perform annual maintenance.... annually. It shouldn't take long with a gas appliance but needs to be done yearly. Ask for to see the results of their work performed.
Second, have them look into what is called "outdoor reset". This additional control, added to a system without one, will still give you that possible 30% savings but without upgrading the entire boiler.
Third, get a heat load survey done on your building. This is the only way to know if your boiler is sized right, then you will know for sure instead of guessing.
Finally, a huge percentage of electrical use is from motors. The circulator pumps and and zone valves should be looked into replacement. I know in ct we had rebates available for upgrades but it varies state to state. Look into it in your area because we actually have a rebate available for installing the previously stated "outdoor reset control"
Hope I helped a little. Any questions just give me a holler.
Real Estate Professional · Pawtucket, RI · Member since 2016 · 133 posts · 79 votes
9y
if you have laundry on site make sure its coin op , or they are doing laundry on your dime and doing it often.
16 year old boiler needs updating to a new high efficiency ones you'll save at least 20%
controlled thermostats for each unit so they don't just set temps to a ridiculous temps
maybe even high efficiency water heaters also (tankless) worth looking into
energy assessments from your utility company (they should have a free program-they do in my state)
windows and doors . a broken window can be costly as heat will never seem to turn off but this is summer season and the heat shouldn't be on i would think
my neighbor's 6 unit (fully occupied) only costs him $300/month and he provides heat/hotwater
overall i found that i saved most money from insulation my highest gas bill was $425
i changed my front door , bill dropped to $375
replaced my windows , bill dropped to $325
insulation in attic, basement, and knee walls, bill dropped to $275
i think i gotten my gas bill as as low as $200 during winter which is pretty good for a single family in my neighborhood