Rental Property Investor · Douglas County, MO · Member since 2014 · 1k+ posts · 1k+ votes
Which would you choose?
We have a small house that we are completely gutting. We will be changing the floor plan, redoing the plumbing and updating the electrical, so we can choose either gas or electric for the appliances.
Pros:
Gas: Cheaper for the tenant, and we have found them more reliable than electric.
Electric: Cheaper for us, installation is simpler, no pilot light.
Cons:
Gas: Unit is a little more expensive to purchase, requires a vent, sometimes pilot lights can be an issue.
Investor · Appleton, WI · Member since 2012 · 1k+ posts · 464 votes
12y
I always go gas if I have the option. Cheaper for the tenant translates to a higher rent you can charge. Electric units also seem to have more problems and require more maintenance. An element will go bad before anything else on an electric water heater in my experience. The tank has to rot away for a gas unit goes bad in my experience. Never had any problems with a newer unit with pilot lights.
Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
12y
Another thing to look at is are there any other gas appliances?
If not maybe getting rid of that extra service is worth it. If there are other gas appliances like a stove and heater then its more of a savings to have another gas appliance that costs less to operate.
What's common in your market? I have found that "different" can make it harder to sell or rent unless it is considered an upgrade. I know that we have been in some areas that gas, is considered "bad" and other areas it is highly sought after.
Contractor · Atlanta, GA · Member since 2012 · 176 posts · 103 votes
12y
I agree with researching your market and your renter demographic. On rehabs I'll usually keep the type that was already there, or match it to the furnace/heat pump. I always thought gas was better for the reasons you listed, but then found that with a Section 8 rental it was seen as a negative by many, because it was an extra upfront deposit that the renter had to pay.
Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
12y
If gas is available, we'd go with gas. The power vent models can be side wall vented and don't need chimney. Not only is gas plentiful and cheaper, gas HW heaters have a much quicker recovery so you can have a small tank capacity and still get lots of hot water.
Another alternative is the tankless water heaters, they are more expensive but save more energy since they only use gas when there is a call for hot water. These could be a selling/renting point for the house, and could be coupled with other energy efficiency of the property like new windows, extra insulation, and high efficiency furnace.
We are also making decisions on the other appliances and furnace, so that may sway our decision. I think most houses here have a gas water heater, but electric is not really seen as "different". It has a stigma of "expensive" but with the recent meteoric rise in propane prices that may change.
We were thinking that we'll probably match it to the furnace, but your comment about the extra deposit brings up another issue. The house currently has propane, and the tank is at 50%. I don't know yet if natural gas is available at that location. So how do we charge a renter for the gas that's in the tank when they start renting? It will be summer before we have it ready, so that 50% will take them well into the heating season - probably to mid-December. The gas cost us nothing since it came with the house, but it would cost $3.69/gal for a new customer(just priced it yesterday). I think it's a 250 gallon tank, so there's about $450 sitting in the back yard at current prices.
Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
12y
Ahhh propane vs natural gas would potentially change that decision.
As far as how to deal with the partial tank issue I'd put the tank level in the lease agreement similar to if you rented a car. I'd either fill it now and then make a full tank be a requirement on move out which you could deduct from the security deposit if necessary to fill, or note the level as being 1/2 full and then require it to be 1/2 full on move out and anything less would be charged on move out.
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
12y
Propane changes things, because propane is a more expensive fuel. If natural gas pipe cannot be run to this house affordable, then electric might be the way to go.
As for the tankless idea that @David Krulac raised, your gas line does have to be sized correctly to support the capacity needed by the tankless units. I have houses where the gas utility has said the lines won't support tankless.
Rental Property Investor · Holley, NY · Member since 2011 · 507 posts · 347 votes
12y
In rentals that I am not paying for utilities, it is a no-brainer - electric every time. With gas (or propane) you need a chimney for gravity vent units, that means you now have to properly maintain the chimney and possibly install a liner, repair masonry, etc. You COULD go with a power vent water heater, but that adds a few hundred dollars to the initial cost and the inducer may very well kick the bucket before the tank rusts out. By the time that happens, it will make more sense to replace the whole thing versus just the inducer. Inducer is a couple hundred dollars, elements for an electric unit are less than $ 30 with tax. Electric water heaters are cheaper and in my experience, tenants really don't care. They are much more sensitive to electric HEAT than they are to electric water heat.
For furnaces, I would lean toward gas/propane with a 90+ rating which has the power vent. The reason for that shift in argument is because this is much more likely to make a difference to the tenant AND going to the power vent eliminates the need for chimney maintenance.
Homes in my area tend to be older, meaning the chimneys are in need of repairs or will soon. Chimney penetrations in the roof are future leaks. I make these changes to the mechanicals in preparation for being able to abandon or tear down the chimney so that I no longer have to maintain it. Price a chimney repair or liner and the numbers quickly make sense. Add in a future roof repair and possible water damage from the leak and they really make sense.
If I am the one paying the utilities, then I probably would consider a power vented gas/propane water heater in lieu of electric because it makes a difference in my operating expenses. I go with a power vent furnace in every instance simply to prepare to eliminate the chimney now or in the future.
Real Estate Investor · atlanta, GA · Member since 2013 · 456 posts · 237 votes
12y
Which to put in really depends on the region or area of the country the property is in, what you are doing with the unit and how it will be rented. We rent almost all of ours as shared housing. In atlanta, on higher end units and flips, it will either be gas or high energy efficient electric. On basic single family rentals, tenants will prefer electric if they are paying the bills. Most single family renters want all electric so it's one bill AND if they owe for bills on gas, they can ignore it for now...plus, intown atlanta, it costs $50 a more of thereabouts just to have the gas meter hang on the wall! For a renter, if they've got bad credit or outstanding bills which a lot of the lower end tenants will have, one util means one deposit....having gas often means paying off an old bill and another deposit...plus that extra surcharge in our market.
With propane.....that's the most expensive one of the 3....so I'd switch it to high efficient electric and search online for a scratch and dent supplier. I get my high efficient ones for half price scratch and dent. I'm going through a rewire and changing all the appliance & hvac to electric right now for a flip we are doing in atlanta. We'll have about $45k in it when we're done and it will sell off for about $90k once it's fully rented and cashflowing at about $1k a month. Happy Investing!
Rental Property Investor · Douglas County, MO · Member since 2014 · 1k+ posts · 1k+ votes
12y
Sometimes one day can make a huge difference. We discovered that the propane tank has a broken gauge and is mostly empty. No real loss as we didn't really want to use propane if we didn't have to.
But good news! We can get natural gas service, and it won't cost anything to have the pipes run. We still haven't decided on the water heater, but we'll definitely go with gas on the furnace.
@Adam Johnson I'm not sure what kind of water heaters get installed in NY, but around here they don't need chimneys, just vents, usually 4" metal pipe, straight up through the roof with a cap. Still has the potential for leaks, but no liners or masonry needed.
Thank you to everyone for your input, it's very helpful!
Rental Property Investor · Holley, NY · Member since 2011 · 507 posts · 347 votes
12y
Metal vent pipe to go through the roof is most likely double or triple wall pipe, which is not cheap and can rust out eventually. Check your building code for what is required. A power vent water heater can use PVC through the sill so the vent is cheaper but the unit is much more expensive. I buy to hold long term which is why I do it my way. I am thinking about tomorrows expenses too
Investor · Blythewood, SC · Member since 2014 · 45 posts · 7 votes
12y
I'd go with a builder grade tankless gas water heater. Definitely a selling point to potential tenants and it only uses gas when water is called for, it's not heating 50 gal of water 24/7.
Contractor · Blackfoot, ID · Member since 2013 · 149 posts · 52 votes
12y
As a plumber I did want to point out one thing: sediment.
No one thinks about it.
On a new water heater you should flush it once a year, but few do.
Gas water heaters will slowly fail to heat as well when the sediment begins to settle in the bottom, where the burner is of course. Whereas an electric will have the bottom element go out but you can get enough sediment out to replace the element and continue on. I'm not suggesting one over the other, but I would suggest having a plumber stop by once a year to flush it out, either way.
Depending on the area and the pipes, sediment can be costly.
Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
12y
I cringe whenever I see a propane tank. If your choice is propane vs. electric, I would go electric. If natural gas is available, I would go with that for the water heater as well as furnace, oven, and clothes dryer.
Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
12y
Originally posted by @Sylvia B.:
@Adam Johnson I'm not sure what kind of water heaters get installed in NY, but around here they don't need chimneys, just vents, usually 4" metal pipe, straight up through the roof with a cap. Still has the potential for leaks, but no liners or masonry needed.
Newer, higher efficiency gas water heaters and furnaces do not require a chimney or a 4" metal vent (which is really chimney, possible with a vent in the same pipe); they can be both vented and exhausted through the side of the house.
I cringe whenever I see a propane tank. If your choice is propane vs. electric, I would go electric. If natural gas is available, I would go with that for the water heater as well as furnace, oven, and clothes dryer.
We will be able to get natural gas, so we'll go with that for the furnace and possibly the stove. The water heater is still undecided, but gas dryers are virtually unknown here.
If you are going natural gas for the furnace and range, then I would put in a gas water heater as well - either storage tank or in-line depending upon your budget. Gas water heaters have a faster recovery time than electric.
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
12y
Although I have a gas dryer in my own home, none of my rentals with gas have a gas dryer. I don't even have piping set up to feed gas into the laundry area to support a gas dryer. Gas dryers are usually special order, while electric dryers are available on next day delivery. Even used dryers are mostly electric. So no gas dryers in my rentals.
Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
12y
I once had a renter tell me that she was allergic to the smell of the gas appliances, so we opted for electric. I later found out that she owed money to the gas department and her allergy was more likely that she was allergic to paying the bill.