Converting a boiler to four separate furnaces?

[Daly Vaughn]

Hi fellow Cleveland-area and Ohio investors,

I'm looking at a four bedroom apartment that runs off of a central boiler today.  The boiler is old.  There is no central AC for any of the units.  The broker I'm using to examine the deal recommended I might get rid of the boiler and install separate small in unit furnaces instead.  He suggested this would cost approximately 3k per unit. 

He suggested the central boiler might ultimately cause me more tenant headaches from a maintenance perspective and that by having a central boiler, my own operating expenses go up, versus passing those costs to the tenants.  I'd be looking to buy and hold this prop for at least 5 years, but I'd like to buy it for the long haul. My questions are:

• Does this recommendation make sense from an investor's perspective versus keeping the boiler until it goes out and/or replacing it with a newer central boiler?
• Have any of you done this type of modification before to a small multiunit prop?
• Do the costs seem reasonable (in the right ballpark) for this type of modification?

Thanks in advance!

[Mike McCarthy]

I think it makes sense, but I think 3K per unit installed is a very low estimate. The boiler itself is probably $1500, but you'll have to do quite a hit of plumbing rework to get the right pipes connected in the right places and separate off each unit. Plus running the fuel lines, exhaust, etc.

My best suggestion is to give an HVAC person a call and get a rough estimate from them.