Offering free heat?

Question

What's up BP Members?:-)

I'm a newbie from Philly, PA looking for some general opinions on a question.

I have yet to purchase my first investment property, and I've never bought or owned a home so I'm not really familiar with the heating costs of a regular 3 bed 1 bath rowhome. I currently live in one with my parents and every winter I hear them complain about how high their heat bills are (gas heat from the city). We live in an urban area of north Philly and I often hear neighbors in general complain about expensive gas costs also. Due to this I'm thinking of offering free heat in my first SFR because it seems to be a high demand for it.

So my question is, how high do gas bills actually go over the course of a month in urban, city areas in the winter?Are we talking between $200-300 or higher than that?

Thanks in advance for any answers, and please excuse my rookie ignorance lol

Kevin C. · Answer

Free heat to a tenant means 80 degrees in the dead of winter with the windows open.

You can't even begin to compare a typical 3BR, 1BA owner occupied home's heating costs with a 'free heat' tenant occupied home.

Go to a buffet sometime and see all the waste, then think about all the heating fuel that will surely be wasted by a tenant that is not on the hook for heating costs.

Don't even consider it.

Sharad M. · Answer

I am not sure if I follow this. Why would you want to 'get away with it'? That's a lot of money you are talking about on a monthly basis. Just charge what other landlords are charging.

Ty Wesley · Answer

That's why I love this site. Thanks for all your advice guys. I kind of figured I could get away with it if the bill always stays between $200 and $300 from month to month, but I guess thats not a very realistic estimation, huh?

Steve Babiak · Answer

I have tenants that pay their own heat - and keep the thermostat on 62; if I paid for heat, I'd be required to set thermostat to 68 or higher!  They will only conserve heat if they will feel the expense of the heating bill.

George P. · Answer

Did you hear Dave Lindahl's story about his tenants who'd put ice buckets on thermostat so that it would keep working 24/7. And yes, the windows were wide open (it was kinda hot inside as you can imagine)

Michael S. · Answer

don't worry about getting tenants"IF YOU BUILD IT THEY WILL COME"

Ty Wesley · Answer

Ok I see what y'all mean. Im gonna scrap that idea, thank you to everyone on this thread for your input and advice. It is greatly appreciated!!!

Harry M. · Answer

Hey Ty, I definitely agree with the others here. As a landlord, you want to control or at least influence as many of your expenses as possible - then through your efforts you can do everything you can to make sure your business is running as efficiently as possible. Leaving such a large bill up to your tenants discretion is not going to let you do that.

Also, regarding the other rentals in Delaware offering free heat - it's not really free, it's built into the rent. So you do need to take that into account when setting your rent - you may have to go a little lower than the ones offering "free" heat.

Raymond B. · Answer

As a new investor, do you understand the 50/50 rule as a guide?

If not, plenty of information on this site about the 50/50 rule as a guide.

Ray in Ct.

Ty Wesley · Answer

Sorry Max. I'm planning on my first investment  property being in delaware. Their property taxes there are low enough for me to still turn a positive profit after paying a bill of $200 to $300 per month. So what I meant by "getting away with it" is still getting a good enough amount of positive income. I see plenty of landlords offering free heat in there listings out there. So I think a lot of Investors do this in the Wilmington, DE area.

Hope I cleared that up for you. Thanks for your input :-)

Offering free heat?

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