How to convert single HVAC in a multi family to individual units

10 Replies

Hello BP Members,

I am evaluating a deal for 10 unit building. The building has single water heater and single heating units with outlets to all the 10 units. Currently, the owner pays for hot water and heating. I would like to convert this individual units so that tenants pay for hot water and heat. Owner would still pay for water. 

Any ideas on cost and how to go about this ?

Thank you

@Ricardo Sancez   a little more info and  perhaps people can help. What is the location, how big are the units, how are the units configured? side by side townhome style etc?  What is the current HVAC. What is the fuel? 

The simplest and most common answer is to go electric.  Electric baseboard is cheap but you need to know if the building electric can handle it.  Minisplits are more but they are more expensive and lend themselves more to smaller open units. However if you are somewhere hot and AC would bring you more rent it could be worth it.   It is going to be expensive for minisplits, less so for baseboard electric. For water you can go to point of use hot water heaters otherwise you might need to re-pipe. 

Your better bet might be to go to RUBS for heat at least in the short term.  If you separate HVAC you need to maintain 10 units so consider that.

@Colleen F.  & @Brendan Miller - Thank you for your feedback. This is an apartment building with 4 floors and 2-3 units per floor. The owner installed new water boiler and 2 heaters. Everything is gas heated.  I checked the individual units and they have electric baseboards in each units. This is 30+ old year building. Was completely gutted in 25 years ago. 

@Ricardo Sancez   Actually I doubt they have electric baseboards, what you are likely seeing is the gas fired hot water baseboard radiators.   If you he said you have a new boiler and it is gas,  RUBS is absolutely your best bet.  Ratio Utility Billing Service (RUBS)   What are the two heaters? hot water heaters?   What is the climate where you are located? 

Unless you plan on opening walls to re-route plumbing, you may be out of luck on splitting up the hot water from common to individual. You mention everything is gas heated, but also say the apartments have electric baseboard heaters. Are the baseboard heaters just supplemental, or are they supplying all of the heat for the apartments? If the latter, tenants might be paying for their own heat already. Otherwise, as has been mentioned, your best bet is probably RUBS- Ratio Utility Billing System, whereas you would bill back the tenants for gas bills. 

Use billback, put it in the lease, sounds like the construction costs will not justify the separation. Meter for all water or don't bother trying to just meter for hot. Not worth it IMO

Beware of splits you usually need one compressor(sorry if that is not the right word for it) per unit, in CA they won't let you share compressors between multiple units(at least in my regions). I just put a bunch of splits in, ran me 7k per unit.

@Colleen F. @Brendan Miller @Russell W. @Zambricki Li  - Thank you for the follow up feedback - We are evaluating on getting 2 building from the same seller and both have 10 units each. Owner has been paying utilities past 25 years...I have not done RUBS before. (Please note that tenants install their own window AC...as these are old buildings). Owner provides  hot water and heat. Tyring to understand from operational point, wouldnt this be challenging getting tenants to pay for utilities under RUBS as they could still challenge on usage and billing. Would you recommend any ways to implement RUBS. I came across this company https://multifamilyutility.com... that manages RUBS for multi-family.  Thank you again for your support 

You should probably post all the numbers e.g. total cost for the property, rental income, property insurance, property taxes, current owner's cost for natural gas, electric, water, trash removal,  etc.

It sound like a building I would stay away from. When I purchased almost every building I own they has swimming pools and only 1 water heater, but every unit always had separate wall heaters. The strange thing was, every time I left Los Angeles and traveled a little distance a water heater in one or another building would go on the blink on a weekend and every tenant would scream about not having hot water and it is difficult to find a contractor who can repair most of these new water heaters with all sorts of new electronic circuit boards and gadgets on them. So, I installed separate heaters inside every unit and re-piped ever apartment unit, but I am a contractor and can do those things for one-fourth the cost other owners have to pay.

If you are not a contractor, I don't think you can recover the cost to install electric baseboard heating because you will most-likely have to bring in a new electric panel with I don't know how many amps and the cost for wiring to get the baseboard heating in every room will be astronomical. So will the installation of tankless water heaters for every unit.

There are probably many much better properties for sale that will not require one or two years of work and the cost.

Yeah personally depending on the situation it could cost substantial money especially on a 10 unit building. Id focus more on efficiency of what you have first to save more immediately. I wouldn't count on separating utilities as a sole strategy to cashflow

first thing id do is insulate all of the heating pipes if they are not now. Id look to lower your current heating and water bills.

Then id look more into your boiler setup. If its a big cast iron boiler, id consider swapping out for a couple condensing boilers with a 10:1 turn down ratio and install outdoor temperature reset. That way the boiler water temperature can modulate as well as modulating the fire rate on the boilers.