Limiting Stove And Oven Use - Tenants using it to heat house

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Limiting Stove And Oven Use - Tenants using it to heat house

Andrew Clark
Rental Property Investor · Raleigh, NC · Member since 2009 · 90 posts · 52 votes

I have a handful of rooming houses with a very interesting clientele. Now that it is getting colder, tenants have started using the stove top and ovens to heat the house.

I've had more than one $400+ bill (with only 3 people staying in the house) and I am racking my brain to find ways to limit their ability to use the stove/oven. I've warned that the stove will be removed, I posted flyers in the houses and talked to tenants directly. They each blame it on someone else.

I've thought about limited their ability to use the stoves by using timers... say from 8am-11pm it is on and off during other times. Also, thought about finding a key system that requires them to put their key in it to use it. If I walk in and their key is being used to heat the house (no cooking happening), they lose their key. Or maybe some sort of cost operated mechanism, coin operated and they get so many tokens.

As you have noticed from these ideas, I don't know what to do and I am really reaching here.

You may also just suggest I put a heater in the kitchen - I've tried, it stays on 24 hours a day on full blast, even more expensive.

Anyone face a similar issue? Any suggestions?

Thanks,

Andrew

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Rob K.
Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
13y

Have you considered installing the $109 electric heaters in each kitchen?

Just curious how often you have problems like fights, drug busts, rapes, theft, etc? How often do the police call you? I'm sure the profit is good, but 71 low income drifters has to be a real headache.

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  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    13y

    How about getting proper heating into the house?

    Sounds like you're paying for heat. If so, it doesn't matter what you do for heat, they're going to be wasteful.

    Could you convert this to a normal house?

    1Reply
  • Carlos Flores
    Commercial Real Estate Lender / Syndicator · Dallas, TX · Member since 2011 · 888 posts · 309 votes
    13y

    Don't know the complete situation or the length of your leases (which will dictate when you can do this), but you should place a monetary cap on utilities, apportioning the excess among the tenants. You mentioned 3, so 1/3 each. If only two during the period, then 1/2 each, etc.

    1Reply
  • Andrew Clark
    OP
    Rental Property Investor · Raleigh, NC · Member since 2009 · 90 posts · 52 votes
    13y

    I purchased these houses from previous slumlords. They all at one time or another had a central heat/air system but they have since been robbed. So, the vents are there, just no mechanics. These are in the worst section of town, cooper is very popular :)

    Each room has a wired wall heat unit, 1500 watts. There are 71 rooms heated just like this. Converting to a normal house (one tenant vs 3-5 tenants) would be about a 70% decrease in cashflow... not a viable option.

    You're right, they will be wasteful regardless. I am just trying to minimize their ability to be wasteful.

    0Reply
  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    13y

    71 rooms? Wow!

    I think this situation is somewhat like a hotel. In fact, a lot like a hotel. You're paying for all the utilities. In exchange, you get a much higher rate than you would for a more normal rental. And you put up with this monkey business.

    1Reply
  • James H.
    Investor · Fort Worth, TX · Member since 2011 · 1k+ posts · 450 votes
    13y
    Originally posted by Andrew Clark:
    There are 71 rooms heated just like this. Converting to a normal house (one tenant vs 3-5 tenants) ...

    What?....

    Is there a typo in here? 71 rooms for 3-5 tenants vs one house for one tenant?

    I'll assume it's 7 rooms...Anyways, the only way you will get them to stop using the stove is if you provide an alternative that works better for them. Period.

    In all reality, 100/month per unit is not that crzay of an expense for an old building - regardless the method of heating.

    1Reply
  • James H.
    Investor · Fort Worth, TX · Member since 2011 · 1k+ posts · 450 votes
    13y

    You could re-install central heat, but not the AC. The heater could be located inside where thieves wont have access. If you wanted to have full HVAC, you can put a cage on the compressor and fence the property to limit access further (that is what I have done with my rental house in a low income neighborhood).

    A central heater might only be 100 to 150/month less for heating, so you'd have to decide if the savings was worth it.

    Personally, I don't want any properties without HVAC. The initial expense was higher to install HVAC than use window units at my rental, but the HVAC will last longer, I won't have window leak problems, the house won't look like crap with boxes hanging out the windows, it is more efficient so the tenant has lower bill facilitating better rent payment performance (not applicable in your case). It is just the right way to do it.

    1Reply
  • Mike H.
    Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
    13y

    Can you get away with replacing the stove with microwaves?
    Outside of that, I don't see any other options other than possibly trying to figure out which room(s) is using all the electricity.

    0Reply
  • William Bannister
    Commercial Landlord · Oshkosh, WI · Member since 2013 · 299 posts · 88 votes
    13y

    Ouch! get this building converted to more efficient heat. I would go green in a flash with this building before you buy any more. Get the furnace purchased and installed and or insulate and change out drafty doors and windows if you can. 1st get rid of electric heat they cost an outrageous amount and dont heat buildings properly. This is a common mistake for inexperienced investors not to properly budget money to upgrade heating and insulation in old buildings. It does a lot for your bottom line to make sure when you due your due diligence and shop a property you factor heating costs. Everyone reading this post that is looking to be in this business always call utility co. before you buy the building to see what the heat and electric costs as well as water. It can indicate things that need to get done before you buy.
    I understand hind sight is 20/20 and you already own this so instead of spending too much time crying about this matter what I would do is quickly scrape up 4k to 6k and get something going on this matter even if it means add a little debt or hustle a favorite hotrod.
    Once your heating situation is resolved then things will get better. Get a central unit in there and cage around it and lock it up and insulate rest of building. This middle part of the country Ohio river valley and Virginias and Caralinas still get cold weather and you see so many of the older building with nothing for insulation. im not sure about buildings West of the Mississippi because im not very active out that way.
    This fracking in mining technology makes getting natural gas easier and will probably be the heat used in most homes over the next 20 to 80 years moving forward as the price has drastically reduced compared to electric..not to mention the terrible condition of our electric grids nationwide. Unless alternatives come quickly getting rid of old electric style heating is almost always a good bet for older buildings.
    Im willing to bet on double digit returns in this matter of investment in going from electric to gas in old buildings.

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  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    13y

    Don't replace the stove with an expensive microwave that can be easily sold out from you - just supply an electric hotplate.

    1Reply
  • Mark H.
    SFR Investor · Phoenix, AZ · Member since 2009 · 484 posts · 181 votes
    13y

    Heat-pump package-units, mounted on the roof? That's how we do it in my area, and they rarely disappear from the roof. You can get them with natural-gas heat.

    As a side benefit, theyre easier & faster to install than a standard gas furnace in the basement.

    0Reply
  • Rob K.
    Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
    13y

    If each room has a wall unit, why are they using the stove to heat the house? Why don't they just use the wall heater that is available for that use?

    0Reply
  • Andrew Clark
    OP
    Rental Property Investor · Raleigh, NC · Member since 2009 · 90 posts · 52 votes
    13y

    It's 22 buildings, total of 28 units (mostly SFHs, a couple triplexes and duplexes) for a total of 71 rooms. They are rooming houses so each room is rented separately. No living rooms, no dining rooms. only bedrooms, hallway, kitchen and bathroom. No heat in the kitchen or bathroom. These are very low end rentals. Code requires heat in each bedroom, not in the common spaces. The model is designed to provide a place to sleep. We also remove any dining tables put in the kitchen to discourage 'friends' from hanging out in the common areas. Friends over usually means late drinking, crack smoking/dealing and other undesirable events.

    We do plan for $100/tenant/month but with water bills as high as $225/month and heating bills as high as $425... on average we exceed the $100/tenant (in the winter). Last weekend we found a city program offering new low flow shower heads, bath/kitchen faucet nozzles. This should decrease our water usage by about 300,000-400,000 gallons a year. Roughly 47% reduction. We'll see the reduction in this months bills.

    None of the houses have gas. They all did at one time but the previous owners converted all to electric. Replacing one electric wall unit costs $109 at Lowes and they don't need replaced often. The last owner claimed high repair costs on gas units (he did say they were old and on their last leg). Most houses don't have much for insulation. We have found a city program that will completely weatherize the house at the tenants request, but it's a 2-3 month wait list.

    I was hoping for a quick fix for the stoves, as it seems the path of least resistance compared to overhauling the entire heating system. I'll be spending the next couple months perfecting the system, unfortunately this winter I'll just have to eat the bills. I'll re-visit gas vs electric units when $$$ is more readily available.

    I appreciate all the suggestions! Keep them coming!

    0Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    13y

    I hope it works out Andrew. This is the absolute poster child for why I don't do the low end stuff. It's problem after problem after problem for squeezing out that few extra percent.

    Landlord paid utilities will crush you especially for low end users. I like the hot plate idea. These types of tenants the more you give the more they take.

    The tenants will not like low flow anything. Many will just rip that off and replace it or take it out. The idea sounds good but I have tried a bunch of ideas in the past only to be amazed at how tenants will screw up your plan for savings.

    Let's us know what you decide to do.

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    1Reply
  • Xing Zhu
    Durham, NC · Member since 2012 · 498 posts · 48 votes
    13y

    If it comes to the point that tenants have to use stoves to heat the house, it is a good indication that there is no enough heat generated by your heating system. Even if you restrict the use of stove, a tenant can simply buy an additional electric heater for 20 dollars. One question is that whether they open the windows all the time? Putting the cost of utility (with lower rent) on tenants is one solution.

    0Reply
  • Rob K.
    Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
    13y

    Have you considered installing the $109 electric heaters in each kitchen?

    Just curious how often you have problems like fights, drug busts, rapes, theft, etc? How often do the police call you? I'm sure the profit is good, but 71 low income drifters has to be a real headache.

    3Reply
  • Shanequa J.
    Realtor · Houston, TX · Member since 2011 · 916 posts · 296 votes
    13y

    Andrew Clark Why don't you charge more rent in the winter months to offset the increased electric bills?

    I read some of your blog posts and the stuff you come across sounds like a real adventure. It's funny, but I give you props for having to deal with it.

    0Reply
  • Andrew Clark
    OP
    Rental Property Investor · Raleigh, NC · Member since 2009 · 90 posts · 52 votes
    13y

    We have tried putting heaters in the bathrooms/kitchens - The tenants end up leaving them on full blast 24 hours per day regardless of whether they are home or current temperature.

    Most tenants struggle to pay the rent, raising rent would just cause them to go further into the hole.

    The police don't call me, ever. The tenants who aren't involved with the police will usually call me, or the neighbors will. It is a headache and I don't plan on doing it forever. I have to constantly interact with people who don't hesitate to pull a gun BUT the payoff is huge. I've bought houses for as low as $7,500 that pump out rent every month. I've bought many houses for around $15-$18K and pay about $1,300-1,800 per month, every month. There is no shortage of new tenants either.

    There are a couple idea I do like above - hot plates, utility caps (with a tenant distribution above the limit) and install furnaces (no AC).

    It is an adventure :) After another 6 months or so I will have this system to the point where I can hand it off to a management company. Policies and procedures are currently being created. These issues I'm having on the front end are just my lack of experience with this clientele and a tad bit of growing pains. Just located 2 more properties this week we hope to buy in the next month. I'm enjoying every second of this experience and look forward to a well oil SUPER EFFICIENT machine soon.

    Thanks again for all the suggestions!

    0Reply
  • Xing Zhu
    Durham, NC · Member since 2012 · 498 posts · 48 votes
    13y

    A heat pump is more efficient (choose dual-fuel if your weather is severe). Cage your system lest it gets stolen.

    0Reply
  • Rob K.
    Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
    13y
    Originally posted by Andrew Clark:
    We have tried putting heaters in the bathrooms/kitchens - The tenants end up leaving them on full blast 24 hours per day regardless of whether they are home or current temperature.

    There are a couple idea I do like above - hot plates, utility caps (with a tenant distribution above the limit) and install furnaces (no AC).

    I've seen thermostats with a lock on them so only the landlord can adjust them. Would it be possible to do that with your heaters and leave it set at 68?

    I'm not sure the hot plate idea will work. It seems that with the type of tenants that you have, the ones that don't cook will pawn or scrap the hot plate. I'm guessing that not all of your tenants cook. I'd bet that some of them have a diet that consists of cereal, fast food, and heroin.

    Could you tell them that the stove is not for heating and if you catch it being used as a furnace, you will remove it? If you need to take it out for a week, so be it. Maybe the tenant(s) that uses the stove will police it and turn it off when it's being used for heat.

    On a side note, my friend's brother lived in a rooming house in the 90's. It was in a nice area, but the other people living there were very sketchy. My friend's brother had to keep a padlock on his fridge and the bathroom was DISGUSTING. I remember being appalled at the thought of having to unlock a fridge everytime I was hungry or wear water shoes to take a shower. To each their own I guess.....

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  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    13y

    Andrew Clark You tell us about how much these cost you, but not about how much you are charging tenants for rent? What do they get for that? How many in each unit, etc.?

    As a landlord you need to do what is necessary to provide heat and air conditioning (if it gets hot there). If the tenants are using the stove, it's because they can't heat any other way, so it's not the tenants, it's your property that's the problem. If you can't cover expenses for the utilities you should have charged more for rent, but wanting to stay warm is not anything unexpected.

    Maybe you need to go through and install insulation, new windows, new hot water heaters, etc., and switch to gas. Many local utilities have programs to help upgrade properties to be more energy efficient.

    Once you do that, put the rents where they need to be to cover expenses.

    0Reply
  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    13y
    Originally posted by Karen M.:
    ...

    Once you do that, put the rents where they need to be to cover expenses.

    I have to assume that statement in the quote came from somebody who has not been a landlord in lower income areas. The rent is set where the tenants can barely afford it already, so raising rent would mean vacancy.

    0Reply
  • Andrew Clark
    OP
    Rental Property Investor · Raleigh, NC · Member since 2009 · 90 posts · 52 votes
    13y

    Karen M., rent is between $90 - $140 per week depending on size, location and number of other tenants in the house. I have houses with 2-5 people in them.

    As a landlord I am responsible for providing an environment which adheres to the cities minimum housing requirements. These are low income rentals, not the Marriott. AC is a luxury (per the city); it costs an additional $10/week. We are not legally allowed to charge for heat because it is deemed a necessity by the city.

    I didn't say I couldn't cover the utility expenses. Having the funds to pay the utilities is not the issue. My post is about maximizing efficiency, increasing the bottom line.

    Many of the tenants have been living in motels/hotels at nearly double the costs - with no kitchen, previous to becoming a guest in these homes.

    Steve Babiak, I appreciate your post. It rings true. The rents are set at a level that provides about a 5% vacancy annually.

    0Reply
  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    13y

    Steve Babiak Andrew Clark You have three options, 1. charge more rent to be able to cover expenses, 2. continue as you are and the tenants will use stoves for heat and you'll be forced to pay for it, or 3. start a non profit, which may give you special rates on utilities, and tax breaks.

    Also, I'd check into upgrading energy features, there's several programs for those types of upgrades, and switch to gas if you have to.

    Steve, if raising rents means vacancies that = lost income. If Andrew has to continue paying for higher utilities, it = lost income. Either way, it's the same.

    The point is, just because the tenants can only afford a certain amount doesn't mean the property can be operated at that amount. Sometimes the numbers just can't work. Unless you're a ministry and want to do philanthropic work at a loss, you have to deal with reality.

    My comments weren't to be mean, just looking at what you're dealing with and how to make it work.

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