Separating Electric and Gas from Cottage Setup

13 Replies

Hi All,

I'm looking at a 2 family property with a 3rd floor cottage set up (basically the attic converted to another apartment. 

Right now their gas and electric is hooked up to 2nd floor. It has it's own circuit breaker, though. 

Can anyone tell me ROUGHLY how much I am looking at to hire a licensed guy/girl to separate both gas an electric to be on it's own meter?


THANKS!

First, find out is it a legal apartment.    What does another two meters and probably an electric panel cost?  One circuit breaker for the unit seems like too little electricity so you might need to upgrade the panel for that you need to look at the existing panel and how many AMPs it is.

Splitting off the electric into two separate meters should not be too expensive - though you will no doubt have to pull a permit. You also need to make sure that zoning will allow a third apartment. 

As for the gas, that is usually much more complicated. Rather than splitting the heat, I would consider including heat in the units. I would advertise the market rent and then make the heating payment in addition to the rent. Calculate the square footage for each unit and prorate a monthly average (over a 12 month period) per unit. Then in the lease agreement state that based on the usage by the tenants, the heating costs will be reevaluated every 6 months and adjusted if necessary. 

Thanks, Ralph. I figured the gas would be more complicated. I would indeed check with zoning before doing any work (or purchasing the house if possible)

Great idea about the gas. That seems like it might be simplest solution. Maybe down the road I can change things up.

Just make sure that it is clearly spelled out in the lease agreement. Don't advertise the rent at the full price. You want market rent plus pro-rated heating costs. Keeping track of heating costs with and without all tenants and during summer versus winter will provide proof of your assessments. Good luck!

The panel you picture is for the 3rd floor unit?  If so you can maybe split off the electric and maybe just put electric heat in the "cottage" if it is even possible for it to become a legal unit. While it might sound great to have the heat split by the two tenants in practice  I am not sure how well it would work.  Look up Ratio Utility Billing Systems (RUBS) to get more info on splitting cost with one meter as suggested above.  The main problem you have is the legality of the unit and making sure it meets code for things like egress. If it is not legal you should run the cash flow numbers as if it doesn't exist.

thanks! That panel is in the 3rd floor. There is electric baseboard heat up there but thinking they'd need gas for hot water, right?

Right now it cash flows with it being a 2 unit. This third cottage unit would be pure bonus.

Originally posted by @Robert P. :

thanks! That panel is in the 3rd floor. There is electric baseboard heat up there but thinking they'd need gas for hot water, right?

...

There are electric powered hot water heaters, so no need for gas on that account. 

thanks Steve. So then maybe I won't even need to separate the gas. That's a major plus. Does anyone have any idea on operating costs of electric heat/hot water compared to gas? Will it be more expensive for he tenants?

The cottage is only a 1 bedroom apartment, so the rent will be low (as I said a bonus for us) and I don't think utilities would be all that high. The property is 5 minutes away from a hospital, so maybe a nurse that works there and simply needs a place to crash. Not worried about electric being all that high for such a small space.

Heat goes up so them may benefit that way.  You can get short term residents or travel nurses if it is a small place right by the hospital that might be your best bet.  Electric heat  will cost more in this area. 

Biggest issue is whether it can be legal though.

Originally posted by @Colleen F. :

Heat goes up so them may benefit that way.  You can get short term residents or travel nurses if it is a small place right by the hospital that might be your best bet.  Electric heat  will cost more in this area. 

Biggest issue is whether it can be legal though.

 I've already spoken with the city zoning board and it's quite common where I'm from. I don't see it being an issue. Just put in an offer, I'll keep you all posted!