Electric Heat in a Rental

[Michael Noto]

Wanted to see what other landlords thought about this situation.

We are buying a distressed 3 family that has 3 apartments: 1 bedroom in the basement, and 2- 2 bedroom units.

The basement apartment has electric heat in it which we are going to keep. The other 2 floors have an antiquated heating system which basically a huge heating unit that spits out hot air in both units, these need to be replaced.

The cost to run forced hot air into these apartments is going to be between 12-15k based on an estimate we received. It would obviously be a lot cheaper to install electric baseboard especially considering one of the 2 bedrooms already has some electric baseboards installed in it.

The house is in a nice neighborhood for the town it is located and is on a cul de sac with a fenced in yard (.25 acres) and the apartments are large 2-bedrooms for the area as well.

My question is 2-fold:

1. In your opinion do you think renters would be willing to deal with the electric heat considering all of the other positives about the apartment/area/house? How much of a detractor is it if it one at all?

2. We will be refinancing the multi through a portfolio lender eventually once all the repairs are done which is something we have done before. However, do you think going with electric over natural gas would significantly impact the appraisal?? Is their a way to quantify this?

Looking forward getting some opinions on this.

[Steve Babiak]

Although I agree that the price that was quoted by the OP is high, the comments above mine mentioning that ignore the ductwork and return issues involved in splitting a forced air central heating system into per unit heating systems. The posts above mine did give good numbers for the basic installation, but I don't think those numbers considered the ducts. And it would be hard for anybody to give you ductwork numbers here for this sort of retrofit. Just my $0.02 worth.