Oil heat paid by owner is it possible to convert to subme treed and paid by tenants

4 Replies

I am looking at a triplex which looks decent and is priced well...except

It uses oil for heat, that paid by the landlord. The bill for oil is ~7k per year which destroys the cashflow

Has anyone successfully converted a system like this to sub metered and paid by tenants?

Any ideas on how this could this be done, and what would it cost?

Not enough info to give a clear answer. Is the heating system forced air or radiators?  What is the layout of the units (e.g. all stacked above each other, all side by side)?

Bill your tenants separately.  Our apartment building has propane heat with a single 2000 gallon tank outside.  We get the propane bill and we separately bill the tenants.  The previous owner set this up nicely.  We charge each unit a "budget" amount.  They pay a flat monthly fee for propane every month based on 1 bedroom or 2 bedroom.  Then we pay the propane bill every month.  The monthly budget amounts are more than what we pay for propane, so it's actually a money maker for us.

I would just tell your tenants that there will be a monthly "budget" amount for oil each month and produce a monthly statement for them.  To just break even on the oil it would be roughly $200 per month per unit.  Set their monthly budget amount at $250 and you should be set.

As @Steve Babiak says, every state is different, so best to figure out what you can and can't do in your state.

You can always raise the rent by $250 per month.  If you call it rent then it doesn't matter what the utility laws state.

Steve, I read through the thread you posted and some of the links in that thread.  I didn't see anything that would say this practice is prohibited in PA.  Maybe I missed it.

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