Would you swap oil furnaces for propane or heat pump in Maine

29 Replies

Purchasing a 6 unit property in Maine (cold, snow), 3 separate buildings, that has separate oil furnaces for each unit.  All of the furnaces are 20+ years old and the tanks are corroding.  There is no natural gas in the town.  Options would be; 

1. Stay with oil,  replace the tanks and the oil furnaces with new tanks and units.

2. Remove the tanks and install some gas pipes for propane, replace the oil furnaces with propane furnaces.

3. Switch to some sort of electric heat pump/minisplit.

Staying with oil is the cheapest upfront costs, but I would assume more on going costs for maintenance and re-priming when the tenants don’t fill the oil tank.  I have propane in my home and it works great, but I always keep the tanks full.  Anyone have properties heated with propane that is the tenants responsibility? Any issues with that?  Anyone have any opinion on what the best long term solution would be?

THANKS!

Put one propane furnace in each building so you are only buying 3 furnaces, not 6. Include heat and set the rent accordingly. Less hassle in the long run and you never have to worry about a tenant letting it run out and freezing your building.

If you do end up keeping a separate furnace for each unit just be aware that propane tanks are typically supplied by the fuel provider. Switching vendors means switching tanks and costly pressure tests of the lines each time. If you have your tenants paying heat you should mandate it be with your vendor of choice so the same tank can remain in place.

The fuel provider will also very likely run a credit check on the tenant so be prepared for that. 

I agree with Ryan.  I would convert to propane and get it down to one furnace per building.  Likely would be quite costly initially as they would have to convert all the zones to one furnace versus the two per building along with converting the furnace itself, but much cleaner and less of a hassle in the long run.

One thing I have had  success with is getting rid of a furnace completely and putting individual propane wall units in each apartment.  https://www.rinnai.us/gas-home-heating/direct-vent....  This is is highly dependent on the size and layout of the apartment but has worked very well for me for 800-1000sqft units.  I have combined this with a tankless propane water heater and found that everything works together nicely even in extremely cold northern Maine.  I believe this approach is more cost effective from an installation and equipment standpoint.

As far as heat pumps are concerned I thinks its highly dependent on what part of the state you are in.  A lot of people up north have them but also have a back up supply for heat due to them not working well or efficiently when the temperatures get very cold.  Sub zero.  The cooling aspects of them in the summer are nice however.  

Thanks for the info @Ryan Murdock and @Jeremy Dugal , much appreciated.  I thought that having separate utilities paid by the tenants would be a plus, but I never thought about them not paying and freezing the place

Is there a reason that you both prefer propane to oil?  

Do either of you see any benefit to buying the propane tanks outright?  Probably would cost about $3600 for 6x 420lb tanks.  I don't see any benefit, other than the tenants being able to shop around for propane.

Thanks!

I'd recommend you also do an analysis on propane cost vs oil over the last 3-5 years. I did in Western MA and found that even though the gas furnace would be more efficient, it cost more up front and there were few propane service providers in the area.  Thus there is something of a monopoly.  With oil, there are 3 or 4 providers to choose from, so I can keep track of the ccompetitio and find a different company if I need to.

@Matt Leonard Most of the boiler techs I know prefer oil as it has more BTU’s. I burn oil at home but still prefer propane in my rentals. Most propane boilers are direct vent meaning you’ll never have to line or worry about a chimney. When I re-roof I knock the chimneys right off. 

Propane boilers can usually be converted to nat gas relatively simply so if you’re somewhere that might actually get that service in the next few years that’s another plus for propane. Propane burns cleaner and usually the annual service is cheaper and easier....although not always. The old cast iron oil boilers definitely seem to age better and last longer than the flimsy propane units on the market these days.

I don’t like dealing with tanks of any type. Period. With oil you’ll always have a tank to maintain. As for propane, unless you are going to buy your own 1000+ gallon tanks so you can shop vendors for bulk discount pricing it won’t be worth your hassle to own a tank...and even then I doubt it makes sense. Let the vendor provide it.

Originally posted by @Dennis M. :
@Ryan Murdock

I heated with oil for years . It sucks , it’s expensive , it’s dirty and subject to oil price changes . I’d do a heat pump system

No matter what fuel you choose today you could have a compelling reason to regret that decision at some point in the future based solely on price. Oil or propane....either one could spike well above the other if the wind so much blows in the wrong direction.

Heat pumps are great to a point but no way I’d rely on any of them as the primary heat source in Maine just yet.

See I don’t know about that because The new style ones can go down below zero and still heat good . My stepmother has a Mitsubishi heat pump that I’ve seen work great even at -5 and windy . I always hear people say they aren’t good for really cold climates I’m in northern Pennsylvania by Lake Erie and  I’ve seen them keep it toasty and comfortable well below zero atleast that’s my experience 

I would opt for propane. Many insurance companies will no longer insure a property using oil due to the risk of a leak. A oil leak can result in a cost of several hundred thousand to clean up contaminated soils. Environmental regulations are only going to get tougher going forward forcing oil heat out of favour in time. 

Originally posted by @Thomas S. :

I would opt for propane. Many insurance companies will no longer insure a property using oil due to the risk of a leak. A oil leak can result in a cost of several hundred thousand to clean up contaminated soils. Environmental regulations are only going to get tougher going forward forcing oil heat out of favour in time. 

I have never heard of an insurance company refusing to cover an oil system. When has this happened to you and what carriers ("many"...) denied coverage?

We have a property that we set up with propane boilers. In that case, we wanted to switch to natural gas, but had to wait on that option for a variety of reasons. We knew it would be an easy switch to NG later on (and in fact, we just made the switch, 4 years later). We did once have a tenant "forget" to fill the tank, resulting in a panicked phone call when the heat didn't work. To be fair, the tenant wasn't the sharpest crayon overall, so clearly not the propane's fault. But it can and does happen. 

I'd go with propane or oil. Many Mainers still don't know or trust heat pumps, and it might dissuade renters. Just another perspective to consider. 

Funny to find this thread as I just typed into search for this exact question ans it happens to be in nt atate! Now my only question is, does anyone have any recommendations for some high efficiency propane direct vent heaters? I’m looking at replacing some in my 11 unit I own on the turnovers. The originals currently are super cheap and 0 efficiency. I actually pay for heat at the complex so I’m trying to cut down costs.
Originally posted by @Thomas S. :

@Ryan Murdock

I am in Canada. We have far stricter regulations up her and as a result many insurance companies simply say no if you have oil heating. Some require fiberglass tanks but generally it is best to avoid oil all together.

You tend to confuse people when you give Canada related advice for US based properties.

@Matt Leonard

The answer may not need to be an either (heat pump) or {propane/NG) furnace.   Our experience in places where there is *real* winter, is that code requires you have an ancillary source of heat when using a heat pump.   Many people automatically think electric resistance baseboards (or electrical coils in a central air-handler), but your ancillary heat could be easily fuelled with natural gas, propane, oil or another fuel.

Presuming your use of "furnace" means a forced air furnace and not a boiler and hydronic heat, you have the option of adding a heat pump with an exchanger insert in the plenum of your existing ductwork.  Using a multi-stage controller, the heat pump would provide cooling in the summer and first stage heat during the heating season.  When temperatures drop to a point where the heat pump can no longer do its job (i.e. somewhere below -13F to -20F) - perhaps even prior to that point when COP factor on the heat pump drops below a pre-determined threshold - the existing furnace would fire as the stage 2 heat source.

If your oil furnaces are much more than 20-years old, their efficiency will likely be less than 75%.  If they are right around the 20yr mark, it is possible they have an efficiency around 80%.   Even the most efficient, modern oil furnaces are only 86-88% efficient.   

Modern, direct vented, natural gas and propane furnaces are typically in the range of 92 - 95% efficient.

Your decision on whether to replace the furnace will depend on the efficiency of the current unit and whether it make more business sense to replace the furnace or to add a heat-pump with an exchanger insert to the existing system ... and, it is (or should be) primarily a mathematical decision yielding which ever approach is going to offer the shorter payback and lower operating costs.

The math aside, there will be other non-math factors.  As an example, I personally do not care for oil heat:  I do not like the liability of storing several hundred or thousand gallons of fuel oil (effectively diesel) on the property and, do not trust tenants to keep the tank filled.

Regardless of the heating solution you choose, your best return comes from the fuel you do not use (Negawatts or Negabarrels).  Improving the building envelope - air sealing, greater insulation - will give you more bang for your buck.

@Roy N.

All valid points.  I yanked out the oil and put in an on demand combi propane boiler for DHW and hydronic in floor radiant heat in my primary residence.  Insulated and sealed to the gills and would highly recommend it to anyone who is doing a rebuild to the studs.

The property I am buying has forced hot air and I'm not going to rip out the ductwork, so new heating systems will need to be FHA. I love the efficiency and energy savings of a dual propane and heat pump system, but since I would like to keep the tenants paying the heating bill, I don't think it would get me any additional rent to justify the cost.

The plan as of right now will be to test the units at inspection and hope they will last through the winter.  4 of 6 units have had tenants in them for many years, so I think its safe to assume that they had heat last winter, and I will be dropping by to ask.  Come spring, I will have a plumber/hvac tech rough in all 6 gas lines for propane and then replace the furnaces in the summer/fall.  This will allow me to pay for the upgrades with the rental cash flow and stagger the costs so I don’t need to pay out of pocket up front.  Additional benefits would be no need for chimneys and no chance of CO poisoning, less chance of environmental damage from oil tanks, and less ongoing maintenance.  Anyone see any flaws to that logic (other than the obvious potentially dead furnace)?

My main concern was that there may be some sort of propane cost bias from the tenants.  My math tells me that it’s roughly the same total cost for heat due to the higher efficiency of the propane vs the cheaper cost of oil fuel.

Thanks!

@Matt Leonard One minor point to add to what others have said.

One of the concerns expressed was running out of oil and freezing the water pipes.  

I had oil heat in the home we recently sold.  The oil provider we had offered automatic delivery.  They use a "degree day" formula to calculate usage so they knew when we needed a delivery.  In the 32 years that we lived there, we never ran out once.

It's my understanding that this is common practice.  I'd be very surprised if it were different on Maine.

The other feature they offered was "level billing".  They calculate annual usage and bill roughly the same amount each month.  That should keep tenants from coasting through the summer months and then getting slammed with big bills in the winter.

Whatever solution you pick, I'd want to be sure that tenants are paying for heat.

@Charlie MacPherson

All the delivery companies offer such services, but that does not mean the tenants will use them.   When I was working in Maine and NH, I recall petrol stations dispensing both kerosene and furnace oil (really diesel) and folks buying 5usg  containers to heat their homes for the day.

Well I will offer a suggestion for a different solution.  I have properties in a cold and snowy area, a ski resort town.  I recently installed Carbonic Heat in one of my buildings.  We love it and so do the tenants.  It is a carbon film that is applied under rugs or tile or wood flooring.  It can also be used in a wall near pipes to keep them from freezing if freezing is a problem, but it will provide heat that keeps the building warm and will prevent freezing.  It is run with wall thermostats.  This is electric heat and it is very economical..about  60% of the cost for forced electric or gas heat etc.  ( You can call the company to find out how this happens. It has something to do with nano particles or something like that.)  It uses far infrared waves to heat objects and people.  The floor heat keeps feet and people warm which my tenants love.  There is no wasted heat on the ceilings any longer. I plan to refit all of my units with this solution in the future.  The system can be programmed to turn on when the user is home and off when gone.  My tenants are on separate electric meters and so billing is not an issue.  They sign up to pay their electric bill when they move in and are billed monthly for their usage.  I would suggest that you contact this Company for a bid to see if it is competitive with your other options.  It really  is a revolutionary heating product and i got a lifetime guarantee.  If you have electric failures, it will not provide heat.  But then none of the other heating options provide heat without use of electricity as the starters and fans do not work during and electrical outage.  So both options have the same drawbacks.

@Timmi Ryerson

Interesting.  I have radiant floor heat in my primary residence and they are awesome.  Is it designed to be a primary heat source or as a secondary/luxury. I noticed the info shows cutouts for floor registers which would indicate that hot air would still be used.  Does it work on uneven subfloors? A lot of the older houses in my area have pretty squirrelly floors.  Are there any installers/dealers in the southern Maine or New England area?  Seems pretty pricy, a 100sqft kit is $1200, making an 800sqft apt around 10k just for the mateials? 

Matt we used it as a single solution..not registers or furnaces.  It is quiet and does not push dust around for those who are allergic.  I would suggest that you call the company.  Here is a link for another user review https://www.green-talk.com/radiant-electric-heat-by-carbonic-heat-thin-efficient-and-infrared/  I am not sure where they have installers.  I live near their offices. So that was not a problem.  I think you would get better answers from them directly and if you have plans, as I did, they can give you estimates in a day.  Hope that helps.  I chose this option because I would never have to worry about a furnace or maintenance on ducts etc.  It was a better choice for me.  And I found it to be comparable with the cost of duct work, new furnaces and hook ups to gas lines, which we have here.

i just asked same question of my two different hvac guys.

both said same take aways .

1. propane furnaces most efficient. 

2. oil traditionally cheaper but more fracking supply is keeping propane lower. 

3. oil has bit more btus but also requires more maintenance but propane heaters parts usually cost more when break.

4.  currently heat pumps don't work below -13 degree F.   so must have another back up heat source that does. Thats important in Maine.

5. installing oil or propane in your non owner occupied bld requires licensed installer in most places.

6. both owned a house that used oil as its primary heat with wood backup. 

Originally posted by @Jeremy A. :

i just asked same question of my two different hvac guys.

both said same take aways .

1. propane furnaces most efficient. 

2. oil traditionally cheaper but more fracking supply is keeping propane lower. 

3. oil has bit more btus but also requires more maintenance but propane heaters parts usually cost more when break.

4.  currently heat pumps don't work below -13 degree F.   so must have another back up heat source that does. Thats important in Maine.

5. installing oil or propane in your non owner occupied bld requires licensed installer in most places.

6. both owned a house that used oil as its primary heat with wood backup. 

A gallon of heating oil (diesel) "contains" ~138K Btus of energy.  A gallon of propane ~91K.   When you factor-in the efficiency of a gas-fired furnace / boiler versus oil-fired, the effective difference is in the ballpark of 25 - 30K Btus.

There are models of air-to-air heat pumps which will operate down to -30C (-22F), however code requires an ancillary heat source.