Converting 3-Family Shared Heating/Hot water into separate units

[Socrates Ayvaliotis]

Hi -

I am currently under contract for a 1960's era home in Jersey City.  The home has a central Oil-Fired furnace which provides both heat and hot water to all three units. The current owner has agreed to remove the oil tank, but will require us to provide heating to the building. 

I intend to owner occupy for one year, and subsequently rent the building out in future years. It would be highly preferable to have these split, but if the cost of renovation is too high, will bite the bullet and bake heating and hot water into the tenant's rents.

The current boiler room is on the ground floor, so can convert this into a bedroom should we find an alternative 

We have narrowed down the options to the following:

1. Installing a central Gas fired furnace:

Advantage:  Appears to be cheapest, will allow us to use existing hot-water piping

Disadvantage: Will hurt re-sale value for three family without splitting, will require re-lining of chimney, will have to cover the tenant's heating/hot water cost, no air conditioning, cannot convert into 2nd bedroom

2. Installing a mini-split system with high efficiency hot water heaters in a closet on each floor

Advantage: Provides both heat and AC, will permit converting ground unit into a 2BR, splits utilities for each tenant

Disadvantage: Will require closet space, (potentially in a bedroom/bathroom), unsure if Mini-split system will be strong enough for the Winters where temperatures can dip below 15F occasionally. 

3. Installing a gas fired combi-boiler/hot water heater on each floor with baseboard heating

Advantage: Relatively low cost of installation , no concerns regarding winter heating, splits the units heating hot water costs, would allow for conversion of 2nd floor bedroom

Disadvantage: No AC, will require a large amount of storage, and would require to take up a bedroom closet to do so in each unit

Currently we are favoring option 2, but any suggestions from any contractors who have performed similar work?  

[Diane Menke]

Socrates I favor option 2 as well. Splits cost a bit more to install but look great and are quiet. They can cool and heat. I would make your plumber/HVAC pro guarantee the tankless water heater units will operate to a minimum standard..A hot water tank provides 80 gallons of water at X temp for 30 min....something like that has to be in the contract. I would ask the plumber to insure the tankless is at least that good or better. There may be tax benefits to you. And the higher efficiency will be attractive to the tenants who have to pay to use them.