Need advice on separating utilities for a new rental property

OP

New to Real Estate · Madison, WI · Member since 2020 · 68 posts · 16 votes

5y

@Jaron Walling. I should say that because this property is a rehab( kind of a mess on the outset) I have already committed substantial resources into rewiring the whole property so this would be a good time to do it should I decide to go that route.

Colleen F.Pro Member

Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes

5y

You have a couple of options, since you said gas furnace I am assuming force air. If your furnace is okay you could price separating out the gas or leave one with gas and one with minisplits or just install a second gas furnace. I would not recommend baseboard resistance as a sole source of heat as minisplits are cheaper to run although baseboard is cheaper to install. What you have to do is get a good HVAC guy in there for proposals. Is AC going to be considered essential in WI? What does the competition have? It all depends on your setup and current duct work.

2 Reply

Nathan GesnerBusiness Member

Moderator

Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

5y

Originally posted by @Account Closed:

@Jaron Walling. I should say that because this property is a rehab( kind of a mess on the outset) I have already committed substantial resources into rewiring the whole property so this would be a good time to do it should I decide to go that route.

Jennifer, you said it has a "furnace" but only one thermostat. What kind of heat is it? If it's forced air, it's not worth trying to separate. If it's hot-water baseboard then you can install zone valves and second thermostat, allowing each unit to control their own heat. Pretty inexpensive.

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Fernan Nava

Rental Property Investor · Barstow, CA · Member since 2015 · 131 posts · 102 votes

5y

I would cover the vents on the unit that has no thermostat, and install a wall heater, you can get those things for bout 500 pls labor you solve the issue with at most$1000. As for paying utilities, find out the average in the area plus a pad and add it to the rent. When you advertise for ur units advertise only the rent price and add on the details section off the add, that tenant pays x amount for utilities. Good luck

OP

New to Real Estate · Madison, WI · Member since 2020 · 68 posts · 16 votes

5y

@Colleen F. Thanks for your reply...I asked contractor about doing gas for one and mini splits for other but he tried to talk me out of it and I have not figured out why...I’ll have to circle back with him. I like that option the best. Although AC is pretty standard in most apartments in Madison so I will have either have AC added to the forced air furnace side (which I had originally budgeted for. Or just provide a window unit.

OP

New to Real Estate · Madison, WI · Member since 2020 · 68 posts · 16 votes

5y

@Nathan G. Yes, forced air

OP

New to Real Estate · Madison, WI · Member since 2020 · 68 posts · 16 votes

5y

@Fernan Nava...thanks for your reply. That was decided against rather early in because the space is quite small and you can’t really put any furniture in front of baseboard heaters

Nathan GesnerBusiness Member

Moderator

Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

5y

Originally posted by @Account Closed:

@Nathan G. Yes, forced air

Forced air makes it tough. I believe there is a way to create zones with that type of system but I've never investigated it to see what it would cost. I imagine it's cheaper than installing a mini split, but the benefit of mini split is you can get heat and A/C in both units.

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OP

New to Real Estate · Madison, WI · Member since 2020 · 68 posts · 16 votes

5y

@Fernan Nava...a colleague of mine says I’m wrong headed about the baseboard heaters and that I should not care about weather or not you can put furniture in front of it. They say I should be more worried about the cost of mini-splits and the fact that they’ll have to put a hole in the wall.

Fernan Nava

Rental Property Investor · Barstow, CA · Member since 2015 · 131 posts · 102 votes

5y

Jennifer this is a business decision. Your goal is to give your tenants warm air at the least cost to you. Also you want to do this in a way that makes your rental attractive to as many tenants as possible so you can charge confiscatory rates.With that said you can’t have everything in all cases. Forget your friends and colleagues. This forum gave you some ideas now you make the call. In my opinion, these wall waters like the Williams do not take space at all. The grill cover only sticks out bout 6”inches off the wall. As for holes in the wall anything you mount on those walls or ceiling IS a whole in the wall. Good luck to you

Michael C.

New to Real Estate · Denver · Member since 2020 · 75 posts · 81 votes

5y

Im currently splitting utilities in a triplex, has 2 electric panels and 2 gas meters. I’m going the more invasive and expensive option to do it right the first time. Adding 3rd gas and electric meter plus gas lines and wiring to 3rd unit.

You didn’t mention if the property had 2 gas meters and 2 electric meters already. If not that’s more work and $. That’s really the only way to fully split the utilities. Even 2 furnaces on one gas line your still sharing utilities.

I would put the current furnace on one unit and stop the air flow to the other. This helps with sanitary reasons with shared air (smells, COVID or whatever getting sucked through the intake and blown into other unit) If you have 2 electric meters and 1 gas meter you could convert one to electric instead of adding another gas meter.

For some reason whenever I talk to hvac guys about mini splits they never think it’s a good idea, not sure why I think they sound like a good idea. Maybe they are old school or just don’t really know much about them. Mini splits don’t heat well below freezing so in cold places it’s recommended to still have a secondary heating source. Mr.cool has diy kits for a few thousand you can install yourself with prefilled lines. IV thought about that system. Home Depot carries it.

Jacob Lapp

Rental Property Investor · Souderton, PA · Member since 2020 · 124 posts · 106 votes

5y

@Jennifer Torino

I just bought my second mutlifamily the first triplex was already completely separated. Each tenant pays their own electric water and sewer. The one I just bought was originally similar to yours a gas furnace for the whole house. What the previous owner did was isolate the duct work to only heat the second and third floor unit. Then installed electric baseboard downstairs since the electric was already split. I just got a quote for a water monitoring system so I can send bills to each tenant for their water use only $900 for parts and service I just need to do the install!

Hope this helps! Good luck!

Aaron F.

Investor · US · Member since 2017 · 71 posts · 80 votes

5y

Mini splits use a heat pump and therefore lose effectiveness in extreme cold. You will have some pretty cold nights in Madison and will probably need a backup heat source in that case.

Is the duplex an over/under? If so, keeping the forced air for downstairs may leak enough heat up to supplement a mini split in the upstairs unit. Otherwise you’re looking at electric baseboard backup.

OP

New to Real Estate · Madison, WI · Member since 2020 · 68 posts · 16 votes

5y

@Michael C...Thanks for your reply...and thanks for the tip on the Mr Cool...looks like a nice system!

OP

New to Real Estate · Madison, WI · Member since 2020 · 68 posts · 16 votes

5y

@Jacob Lapp... Thanks for replying...so it’s a triplex and one furnace heats two units? Is the thermostat only in one of the units? That’s what I’m trying to avoid in my situation. I lived in a two flat in college and the downstairs neighbor controlled the heat. I woke up to many 58F mornings in the winter 🥶

OP

New to Real Estate · Madison, WI · Member since 2020 · 68 posts · 16 votes

5y

@Aaron F. Thanks for the reply...it is a side by side configuration. There are these low ambient units that are supposed to function better at 0F. They are probably more pricey than the other units.

OP

New to Real Estate · Madison, WI · Member since 2020 · 68 posts · 16 votes

5y

@Michael C. Seems like HVAC guys should be really uncomfortable talking about mini splits when manufacturers like Mr Cool have such DIY friendly kits...a quick search on YouTube yielded more than a handful of video tutorials on just how to do it by pretty average folks. They’ll talk themselves right out of a job 😆

Pat L.

Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes

5y

A fellow investor installed mini splits & with the heatsource being electric the cost was very high during our winters. I have split a single Hi Effic furnace using a zone/volume control damper VCD (solenoid driven) & it runs well from separate thermostats, But that does not solve the one gas meter & separate billing issue.

Duct work can be expensive as we have always done our own but you already have the old duct work in place so separating the feeds maybe viable. If possible I would definitely add the second forced air FCE & gas meter. We also add central air to rehabs, as it commands much higher rents.

As an aside we are stuck with a MF with 5 units on an olde NG hydronic boiler feed, a 70 gall HW tank & 2 NG dryers & the total NG cost for 2020 was $1700. There is no logistical way to run separate NG heating & electric heat would require panel upgrades & a lot of rewiring. We have aised the rents significantly to more than compensate for that cost & we still cashflow very nicely.

Keith Schulz

Investor · Verona, WI · Member since 2008 · 134 posts · 79 votes

5y

@Account Closed Forgive me if I missed something, I only skimmed the responses. If it's a side by side it seems like it would be fairly easy to add a second forced air furnace. I personally would avoid the mini splits in our climate (unless a forced air furnace is just way to difficult). I know there's manufacturers that rate them for up to -15F now, but when you need the heat the most is during those extreme times. You don't want it to fail on a -20 day! Not to mention, when repairs are needed, with a forced air furnace the entire heating part of the system is indoors (only the AC compressor is outside). An HVAC contractor wouldn't need to try to fix outdoor components during the winter months.

Jonathan R McLaughlin

Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes

5y

@Account Closed whats your ultimate exit? One advantage of separate systems/meters is that it makes a condo conversion possible and easier, so if the property is or will be well suited for that you may want to spend more money up front.

Jonathan R McLaughlin

Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes

5y

@Account Closed forgot...mini splits "throughout the property" can be more expensive than you think they would be. And in places like Madison or NH (where we looked at this) its cold enough you likely need a station in each room so the cost adds up quick. We have priced it out a few times in a few different configurations and a fuel efficient furnace keeps beating out the mini-split option on cost, which surprised me.

Jacob Lapp

Rental Property Investor · Souderton, PA · Member since 2020 · 124 posts · 106 votes

5y

@Jennifer Torino

Sorry first property triplex was completely split with electric baseboard. Duplex had the furnace so they isolated vents so it only heated one unit and then installed electric baseboard in the other unit

David Machado

Member since 2019 · 8 posts · 4 votes

5y

@Jennifer Torino

Mini splits require 15-20 amps in your electrical panel. Make sure you have room in the panel otherwise you are looking at an expensive electrical fix.

I use them all the time and the cost is pretty reasonable.

Old school Hvac guys don’t understand them.