Should I buy apartment building with original boiler?

Question

I'm looking at purchasing a 12-unit apartment building that has its original boiler, which is about 60 years old. Of course, I would have the boiler professionally inspected before purchasing the building, but I'm wondering is it worth buying a building with such an old boiler. Any advice on how to proceed?

Jonathan R McLaughlin · Answer

@Tim Gathersdeoending on your strategy I’d consider doing it right away. If you sell it the next guy will ask for the discount + 5-10 more years worth.

Why not replace, take advantage of the reduced heating bills and any incentives out there and increase your basis. Heats gonna be one of your biggest expenses and it ain’t getting cheaper.

See if mini-split conversion will work too.

George W. · Answer

Depends if its steam or hot water. I wouldn't let it stop me either way. Old hot water boilers were basic back then few electronic controls that could break. So unless the cast iron section is leaking it probably works fine.

I'd budget to replace it anyways eventually to save on heating costs longterm. Most likely the boilers only 60% efficient if it doesnt have a flue damper and it is really that old. Back in the day alot of plumbers just threw in whatever size boiler they thought would be enough heat. Usually they were grossly oversized because back then fuel was much cheaper. Oversizing didn't matter as much back then. So if you did a heat loss and installed a basic cast iron boiler that was sized properly you could probably see a 10-30% fuel savings easily with just a new regular non-condensing cast iron boiler.

If the building is large oversized freestanding radiators I'd highly consider swapping it out for a couple of wall mount boilers that are daisy chained together with outdoor temperature reset control. 2x reasons, it can modulate the temperature of heating water on mild days and if the demand is low it only needs to use 1 boiler. Maybe even only 1/5 of high fire on one boiler. So if you had two boilers you can turn down to 1/10th of full fire on the total btu load of both when its mild out. This Can have substantial energy savings. Have done this on several large buildings here. One building cut their heating bill more than 50%.

Russell Brazil · Answer

Every property that every single person buys is going to need a new heating system at some point in the not so far off future.

Tim Gathers · Answer

Thanks, everyone, for your advice! I've crunched the numbers, and I think it's going to be tight even without taking the boiler into consideration. If I can make the numbers work, then I'll see what I can do to make this worth my while.

Tony Lin · Answer

Definitely budget for it. You never want to fund these repairs with cashflow or get caught with no money to pay the repairs. Tenants will leave, complain to the city, write poor reviews. Not having money to repair will spiral to something much much worse.

Bjorn Ahlblad · Answer

@Tim Gathers you have to look at all aspects of the investment. There are many elements that are much costlier than the boiler-roof, windows, foundation etc. I have a sixty year old 12 unit we have nick named it 'the ATM machine'!

Seth Williams · Answer

Just budget for the repair / replacement before hand, if the #'s make sense on the building and you can absorb it, your good. Boilers break, so do other things. Make sure you keep the right amount in reserves. Potentially could even negotiate to have the seller replace before or after closing with an escrow hold back of sorts. Commercial properties are very flexible. We have done deals for clients before where we get a large kick back at closing to cover deferred maintenance. Essentially, everything is negotiable. So, get after it! One of my buildings has a 40 year old boiler, works great.

Should I buy apartment building with original boiler?

Should I buy apartment building with original boiler?

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