utilities: heating solution (electric)

7 Replies

hi all, i am looking at a multi in Connecticut .... property is in good shape and the asking price is fair. rents are under market - reason being: electrical heat. nat gas is available, however, it is not piped in ... so tenants are paying steep electric bills for hot water and heat. 

i was lucky enough to get a moment alone with one of the tenants when i was viewing the property ... i asked "give me one thing you don't love about living here" and he stated nailed it: "the electric bill will bite you in the winter". 

based on past experience ... i am guessing it could cost $25K to $30K or more to bring in nat, install new furnaces and water heaters, etc. While it could be a decent long-term investment on the basis of increasing rents notable, it is not a project I want to get into again (have done it before). 

if anyone has this situation in this part of the county ... where winters can be pretty difficult... appreciate any thoughts or ideas. 

thanks 

I have a house with three different sources of heat, home heating oil, natural gas, and electric heat in Connecticut. If I was building the house over, I would put electric heat in every unit. Easy to maintain and cheap to install. If there is already electric heat that your tenants are paying, I would leave it. That’s just me. If I was living in a unit for a house hack, or if I was already planning on remodeling the house, might be something I would consider. Otherwise it would need to be a strong financial benefit, like a few hundred dollars per month per unit difference for me to do that.

As you already said, it's not worth it. It would be foolish to try and convince you otherwise because I believe you are correct. Move on to the next opportunity.

I disagree 

Heat and electric on one bill when you have electric heat looks high but when comparing to an electric and oil or gas bill together is often pretty comparable in my experience. I usually prefer to invest in insulation and air sealing to justify electric. For a landlord there are innumerable reasons to avoid water piped systems and avoid having to run ductwork

@Jason A. I have a 5-unit in Bridgeport Connecticut with electric heat.  Yes it’s more expensive on the tenants but that property still has some of our longest term tenants. 

If the deal works I would not let that stop you. 

@Craig Bellot - thanks Craig, I agree ... it was an overall great property. The electrical heating was an insignificant issue in the grand scheme. However, unfortunately the seller pulled out and went with a cash buyer. 

I had an accepted offer and had handed over my earnest money deposit, but the check was never cashed. I learned a lesson ... (1): my earnest money was only $5K (I simply went with what my agent told me to). Tho the seller (also an agent) was bitching about it being only $5K. I could have offered 10 or more had I known it would contribute to my losing the opportunity. (2): I made an offer on the house the day it came on the market, it was accepted and I viewed it and handed over the check the next day. Because it came together so quickly, I had to transfer money from my outside bank acct to my checking acct, which takes a day or two. When I handed over the check to the seller/ agent, I said "you can cash it tomorrow" and he said "why not today?" I explained that I had to xfer money .... he bitched "it doesn't take a day" ... OK dude, I actually work at a bank. 

The next day, my agent called and told me he went with a cash buyer. If the seller had cashed my check, not sure he could have pulled out so easily ... very frustrating .... anyway, onto the next. 

@Craig Bellot ... house was $500K. I don't know definitively it was a cash purchase - is this was seller told me agent. Frankly, it was a good price and he could have rec'd a higher bid. Point is, if seller had cashed my check immediately, it would have been too difficult for him to back out (he did sign the contract).