I am in negotiations on a 28 unit 4 story apartment building. I am looking to improve efficiencies of how the building operates. It is heated with a gas fired boiler that costs approximately $40,000 to operate each year. (North of Pittsburgh, PA) . Currently each unit has their own electric meter and I am thinking about changing the heat system to Ductless Mini Splits for each unit so each unit will pay for the heat they use and they also will now have A/C which will allow me increase rent for that amenity. Has anyone done this successfully in the past? I know the initial upfront cost could be pricey but it will pay off in the long run. Thoughts?
Hi Daniel, I've been thinking about the viability of this myself. Although, in a small 4-unit property. I don't have any clear-cut answers, but here's what I've found during my research.
- I'm also in the NE so heating is the main need. An older building with poor insulation and a lot of air leaks will be challenging with a mini-split. So, you may need to consider some additional upgrades there.
- You have to consider the layout and number of inside units. Bathrooms especially are difficult since their small size makes it hard to justify a separate inside unit. I'm considering using this product from Schluter to heat the bathrooms, but it requires installing a new floor.
- A mini-split will require a 240-volt line. If you don't have capacity in the current circuit box, that means upgrading 40 units.
- What's the real ROI? You'll easily spend $3-8/unit to buy and install mini splits, depending on the size/layouts of the apartments. Might be able to leverage some bulk pricing, but you're still probably looking at ~$200k. That's at least a 5-year pay off period. Now if you know the boiler will also have to replace soon, that may just make it worth switching to mini splits.
- What about hot water? That will still require a central boiler. Sure, a smaller one that would be less expensive to run for just HW, but you won't see a full $40k/year reduction in your utility costs.
- On the plus side, having A/C will probably be a differentiation point for your complex. Possibly justifying higher rents and lower vacancy.
In the end, it may be worth pricing out a deep-energy retrofit to super insulate/air seal the property and drop your costs.
Good luck and please let me know your thoughts / what you decide.