Hello - I have an out of state 2 unit rental property that cash flows but could be way better if I can figure out the best way to pass all expenses to tenants. Right now they only pay electricity and I am paying water & heating oil. Problem is house was built in 1890 and has single heating & water systems. In return, I do charge higher rents but it is not exactly offsetting the bills. I pay Oil (in cold months) and water every month.
Question: What is the best way to split these bills appropriately so that next tenants that move will pay for this? I have heard of the Flow (I believe?) water systems that can split water bills in MF's on BP podcast - would this suffice? Same question for the heating system, is it best to just include in the lease that the bill will be equally split among tenants (i.e. 1st unit has 2 tenants, 2nd unit has 1 so bill will be split 3 ways).
Of course this would come with a drop in rent (if necessary) but want to be prepared come May 2020 when both leases are up to avoid vacancy and increase cash flow.
Thank you in advance!
Replace the oil heater with electric cadet wall heaters or baseboard heaters.
Go with for the 240volt models. Higher voltage = less amps = cheaper operating cost for the tenant.
Thanks @Sam L. , I haven't heard of them. Just looking at their site - are they new? No reviews and I couldn't find pricing options for their products. I will dig a little further. Appreciate the insight.
FYI, whether you get 120v or 240v heaters, the electricity cost will be the same. Electricity is billed based on watts (kW), and watts/power is the same regardless of the voltage.
Where you save money is on installation as the higher the voltage, the smaller wire (less cost) is required. Plus you can put more heaters on a higher voltage line.
@Alexander Zurn depending on the location and the class property, I’d at least look into mini-split units. They provide heat and AC, run off electric, and are much more efficient than baseboard electric. They really are great, but are pricey - so you need to make sure that you can raise rent to offset the cost. But once installed, the tenants now pay for their own heat and AC!
I just did this in a 3-unit property that had an old gas boiler and cast iron radiators. They work great.
Originally posted by @Alexander Zurn :
Thanks @Sam L., I haven't heard of them. Just looking at their site - are they new? No reviews and I couldn't find pricing options for their products. I will dig a little further. Appreciate the insight.
Not new. Look on amazon for reviews. You could also go the old electric baseboard heater route but their less efficient.
Also sell them at Homedepot:
@Mike McCarthy interesting. Once they are installed what do you do with the old gas boiler and cast iron radiators? Do you remove them or are they just shut off permanently and are not a concern? I have an oil burner and cast iron radiators so I'd be curious how they are managed post installation. Also, does the thermostat connect to these or is there something else that controls it?
@Alexander Zurn depends on the rest of the reno. One apartment was undergoing a full reno, so the rads were removed and sold to a company that refurbished them and resells them. They bought them for about $30-50 each. Same with the boiler, it was removed and sold for scrap (though that cost a bit to get out).
The other apartments haven’t undergone a reno, so the rads are just sitting there. I didn’t want to deal with filling holes, repainting, etc... yet.