Separating Gas Lines For Tenants To Pay?

Question

I'm looking to purchase an 18-unit apartment building. I am trying to find ways to reduce my gas bill. Can I split the gas lines and have my tenants pay it? How would this procedure work and would I really need a boiler for each unit? Wouldnt my basement be filled with boilers lol How much in your experience would it cost and how long would it take? Please feel free to respond and help me with my situation! Thanks!

John A. · Answer

@George Paiva  How do you separate all your utilities?

George Paiva · Answer

John A. here in CT, it is typical to separate the utilities for Gas and Electric.  You will need a licensed electrician and HVAC person to install the setup needed to accept the individual meters.

The electric company here puts the burden on the owner to have an electrician install the meter bank and the wiring to the pole.  Also if you don't have separate panel boxes for each unit you will need to upgrade this as well.  This is a big cost, budget about $2000 per unit requiring this work.

The Gas company here has been much better to deal with.  They require the owner to have the HVAC person setup the manifolding for each unit but the Gas folks come in and add the meters ensuring they are all connected to the manifolding you setup that supplies gas to Hot Water, Heat, Stove, etc.. for each unit.  This is much cheaper, cost will depend on what manifold and piping you utilize the gas company pays for the meters.

Water here is tied to the property and typically tenants expect water to be part of the "amenities" the landlord pays for.  Although if you wanted to sub-meter and then charge or monitor the usage you can do that but I don't see the benefit in that.

Jon K. · Answer

I lived in such an apartment where they complex took the average cost of water/electric/gas and split it among residents.

The utility cost varied month to month based on the total use of the building divided by the number of apartments. I'm not sure if apartments with multiple occupants had a higher share-- I think (and hope) they did.

If you did it this way, your tenants would pay for utilities at varying rates based on their (building's) actual prior month's average. Some tenants could abuse the system and overuse utilities, but at least you're not paying the bill.... all the tenants are. Well, unless the tenants stop paying their utilities.

Seems cheaper than replacing your heating system or splitting lines.

Michael Sherwood · Answer

I agree with Johann, I understand that pushing the cost to the tenants will make them more 'responsible' with the heat but the cost to convert a building that size to all separate utilities would be massive. You would also need to get your local inspector involved and that can always turn up 'additional problems'.

Prashant P. · Answer

Alot of older complexes in Northeast have large industrial units and heat is controlled for the entire building.  In a case like this, you may want to see what the average cost for gas is for the entire, add 10% and divde that cost equally among all the units.  Increase the rent by that amount.

If the system is older, you may want to look into single unit system.  We did a large school conversion where we bought large hotel grade heat/air unit for each apartment.  They sell manifold for the top of these units which creates different vents for different rooms.  Works great.

George Paiva · Answer

Not sure how it works in CA.  But here in the northeast heat is a big cost factor. Either you bake enough rent to cover expenses or you will see all profit evaporate out the window.  IMO, I separate as much as possible for all utilities.  Only thing I will be responsible is for is water bill, even this I wish I could meter out.

Johann Jells · Answer

You're looking at a huge expense, and not something that can be done in an occupied building. Is it rent controlled?  My analysis of this on an unregulated 4U was that my "heating cost" wasn't the gas bill, but the error (or difference) between the heating cost I built into the rent I set and what it actually cost. Put that way, it would take a VERY long time to recover the capital to separate the heat.

It's funny, I once lived in a rent stabilized building with separate gas meters for the stoves, but heat and electric were included! Seemed insane.