who pays for oil heating on a rental?

[Nicolas Sanhueza]

Hi everybody!

I am buying a rowhouse in PA with an oil tank in the basement, I am doing a rehab but my budget is really tight and I don't have enough money to convert the heating to anything else. How common is to have the tenants pay for their oil during the cold months and how expensive can I expect it to be? I am assuming the tank size is average but I don't know much about the matter.

should I pay it myself and factor it on the rent? or should I have the tenant pay for it entirely? or maybe work something out where we pay 50/50?

I really would like to hear your take on this. thank you!!

[Mike McCarthy]

@Nicolas Sanhueza one of my Philly properties had a reasonably new oil boiler, so it didn’t really make sense to replace it. The tenants paid for all utilities, including heat, but I kept control of the oil fillings.

I set up a payment schedule with the tenants. $250 for the cold months, going down to $100 for the shoulder months, and $0 for warmer months. They’d have a consistent payment, and then at the end of the heating season we’d even up. I’d give them copies of all the oil bills and what they paid and usually I set it up so I’d owe them a bit of money back. In the end, they were paying for their own usage, but didn’t have to stomach the $600 fill charge as it was only filled 2 or 3x over the season.

Lastly, I additionally gave them a $250 discount off the heating as oil is typically more expensive than gas. I don’t know if this was really necessary, but it was worth it to me to not get into arguments about the cost of gas vs oil.

And though you didn’t ask, I used Oil Patch for service and deliveries. Highly recommended.