Separating Utilities on 20 Unit - Occupied / Value-Add Opportunit
Hi all, I am in contract to purchase a 20 unit building. Currently it is a steam boiler system that heats the entire building. The building was built in 1970+/- the structure is in good condition but mainly original. Of the 20 units - 13 are occupied.
We plan on renovating the vacant units and retaining the current tenants (as many wish to stay) by moving them into the new units and proceeding to renovate the next set of units. We are updating the windows to replacement windows which will already help the building's efficiency. A lot of the units seem to get very hot (with tenants opening their windows) and some units that need space heaters or even the tenant's ovens for heat.
The current utility expense for the units is approx $12K+/- each year (avg $50 per month per unit - was thinking of charging an additional $50 per month).
The current owner's plan was to install baseboard electric heaters putting the heating cost on the tenant. I have mixed emotions regarding electric heating.
If we kept the heat as is - we will still need to update the boilers. There is a primary one and a secondary as a "back up" according to the PM. The building is almost sectioned off in three (7 / 7 / 6 units). One possibility (that I need to bring my GC to check) is that if its sectioned off in three - set up a separate boiler per section. Not sure if that would be of any benefit. Looking to reduce the cost by eliminating over heating and also resolve the units with heating issues.
Any thoughts? Much appreciated!
Dillon