Is it worth it to update from oil to gas heat?

Question

We have an older home we are going to rehab, it had a new oil furnace put in in 2006; however, with oil not being near as efficient as gas do you think it is worth the money to switch? This is a flip. I am unsure what potential homeowners might think if we just left the oil. Will it take a lot longer to sell? Anyone have experience with this?

Ellis San Jose · Answer

@Jessica Holwick

My educated guess is that if it's a flip you may not get a good return on the expenditure.  If you know a local appraiser you may want to ask them if the conversion would create added value and how much.

It it were a rental where you were paying the utilities the calculation would be fairly straight forward.

Jessica H. · Answer

Hey thanks Roy! I think we will look into the gas conversion. I think I have read a bout a fairly inexpensive way here to convert from the oil to gas. We do have a gas line in the house already and hot water radiators so I am hoping it wouldn't be too much. we are also doing new windows.

Roy N. · Answer

@Jessica Holwick

It will come down to cost per BTU.  In many, perhaps most, places gas will win-out as both more efficient and more cost efficient - we happen to be in one of those rare locations where oil is as cost efficient as natural gas due to exorbitant delivery charges on the gas.

Though we are buy and hold investors, I can voice for oil heat carrying a stigma to a purchaser.  When we encounter a property with oil heat we discount it in our offer ... for us it is the environmental liability of having several hundred or thousand gallons of heating oil stored on site.

Regardless of your heating fuel choice the best way to improve efficiency is to reduce fuel consumption via better air sealing and additional insulation.  Depending on the extent of your rehab, you may or may not have opportunity to improve upon these factors in a flip scenario.