from oil to nat gas: how to manage tenant expectations

2 Replies

Hi all,

Recently purchased a multi and one of the first projects I’m planning is converting the property from oil to nat gas heating (there is nat gas going to the house already for water heaters).

At current, I cover the oil for two units that share one tank. The third unit has its own oil tank and tenant is responsible there.

I have a lease renewal on April 1 for one of the two units where I cover the oil cost … on the basis I do the conversion in the spring, I’d subsequently be tasking tenant to cover their own nat gas bills going forward (starting this coming winter).

Any thoughts on how I may set expectations or work this into the lease before execution in coming few weeks?

I don’t want to incur the cost of this conversion and then still get stuck paying heating bills … but tenants are accustomed to not paying for heart. Moreover, I’ll need to add appropriate language to this effect in the new lease to soon be signed.

Appreciate any thoughts / advice. 

Unless current rents are well below market you will likely have to reduce the rent if you are to shift heating cost to the tenants and still remain competitive in your market, right? 

Converting from oil to nat gas should reduce your expenses considerably. Any thought to just leaving rents where they are (or even increasing slightly) and keeping the heat included? You'll be profiting more with the reduced expenses and it will be a seamless occurrence with the tenants. They just keep doing what they have always done while you pocket more money. You'll also never have the hassle of switching accounts during turnover or risk a boneheaded tenant shutting the gas off and finding out your property froze up.

To include heat or not can be really market specific so I'm not sure what it's like in your area.

Who pays the gas bill for the water heater now?  Assuming you?  You will need metering for each unit if you don't already have this or planned for it. Not sure the cost but you may want to consider switching everyone at once.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.