Converting to gas heat?

Question

Hi everyone! My husband and I just went under contract with the single-family home that is next door to the duplex we are currently house hacking. We weren't really planning on purchasing another property right now, especially a single-family, but the numbers work and we believe it is a great opportunity. The house does need some minor cosmetic remodeling, but we are also concerned that the property has oil heat. Neither of us have experience with this type of heat, but we know that many home owners have converted from oil to gas, due to cost and efficiency. We do not want to put a lot of unnecessary money into this property. Has anyone dealt with oil heat in a rental property before? Was the oil your responsibility or the tenant's? Also, what are your thoughts on whether or not the conversion is worth it, overall?

Thanks so much everyone!

George W. · Answer

I know that others would disagree but, personally wouldn't let tennat be in charge of filling and buying heating oil. It's way too easy for a tenant to not have it filled and then you'll have problems with frozen pipes. Flip side of the argument Its easy for them not to pay the gas bill, but at least there are laws about locking gas meters in the dead of winter here.Make sure the oil tank is not buried underground. If it leaks then you'll have alot more expenses. Also oil burners need a more in depth cleaning regularly. I would highly consider converting to gas as long as its available in the street. #1 they dont make oil burners much more efficient than 80% and they need to be cleaned to be that efficient. #2 natural gas is cheaper, cleaner and requires much less annual maintenance if your comparing apples to apples. #3 they make gas furnaces, boilers and water heaters that are up to 98% efficient and the equipment that's high efficient is much cheaper than high efficiency oil products. #4 you wouldn't have to worry about having a secondary fuel source for oven & hot water. They make oil water heaters but they're expensive. Which is why most houses that have oil usually have electric water heaters. Also not very efficient. Also I think that having gas would be a strong selling point if you ever sell.

Sheryl Sitman · Answer

@Eric Luzier I have houses with both but recently had trouble renting a super nice house because everyone was scared off by the cost of oil heat. I decided that converting was a good long term investment. For this particular town, the gas company does the infrastructure work free of charge. I chose a high efficiency furnace and to have the oil tank removed. After rebates total cost is around $5,500 . When I looked into doing it in an area serviced by PECO I decided it was too expensive. I think PECO wanted upwards of $2k for their work. Eventually, I will want to do it because the house is in a rapidly appreciating area and it will add more value than the actual investment ...

Matt M. · Answer

@Eric LuzierI have two houses with oil. Tenants are responsible for their oil. I’ve only had one issue in 4 years with these, tenant was in a tight spot and had no money for a delivery so I called and paid for 150 gals of oil and he made a couple payments to me. I will definitely say I could be getting a bit more rent if they were gas, and when the time comes to replace, I will go gas, but in the meantime they are working out just fine.

Mike McCarthy · Answer

@Eric Luzier I’ve had an oil boiler in one of my rentals for the past 3 years. I set up an automatic fill contract, and estimated the monthly costs to the tenants. That way they didn’t get a big $600 filling Bill one month. Then at the end of the season, we settled up. It worked, a bit of a pain, but no real issue. But the indoor tank started to smell and probably leak a little. The smell was bothering everyone, so instead of a new tank, bit the bullet and replaced with a gas furnace. Happy we did, but would have happily kept the oil boiler for a few more years. But tenants are happy since it’s cheaper for them. My only big warning would be if the tank is underground. Otherwise, oil isn’t that bad.

Bob Paxson · Answer

@eric luzeir I am in the HVAC business as well. I would consider how long your think your going to hold the property. If you think you will be keeping it I would definitely consider switching over to gas. The annal cost of cleaning and tuning the oil fired system will add up. In Philadelphia (my area) you can get a rebate last I checked it was around $1500-$2000 puts nice dent into the new system......Better to go with the high efficiency system this way you don’t have to reline your chimney. If you any other questions or to make sure your getting a a fair price let me know I can let you know if they are in the “fair” ball park. Good luck!

Eric Luzier · Answer

@Sheryl Sitman Thanks for your response. Sounds like it will be worth it in the long run to convert!

Eric Luzier · Answer

@Matt M. Thanks for your response. Great to hear that the oil has been mostly working out for you.

Eric Luzier · Answer

Thanks everyone for your responses. The oil tank is not underground and it is available up the street, so that is a plus. We do plan on holding on to the property indefinitely, so I know the smartest long-term decision is to convert. At this point, our final decision is going to come down to the price, since we are currently renovating our duplex as well. At least we know we can always wait to convert to gas down the road if needed.