All electric house?? Will bills be too pricy?

Question

I am under contract for a house right now. We would live in the basement and rent the upstairs. I am concerned because we just found out there is no gas line running to the house. Everything is run on electricity (people keep telling us that that will be too expensive and its not worth it).

Sooo. Does anyone have any experience with a house like this? How do utilities compare to a house that uses gas? It is in Utah so it gets to be pretty cold here in the winter. Any thoughts or information about this would be so great. Thanks in advance!

Stephen E. · Answer

The answer to this question depends on local electric rates. Have you asked the current home owner for prior electicity bills so you can estimate future costs?Here in Ontario government mismanagement of the electrical system has led to major price increases, so we now have amongst the highest rates in North America. (Amongst other things the province signed long term contracts for wind and solar power at 30c+ per Kwh, contributing to a surplus of power that is now dumped in US markets at cut rates). This increase in electricity rates has started to affect the property market. I buy and rent townhouses and there is now a significant price gap between electrically heated and gas heated townhouses. In the same neighborhood a gas fired townhouse would go for $20,000+ more than an electrically heated one ($140,000 vs $120,000) Here is why: in January and Febrruary I have had tenants report electricity bills of $400 - $500 a month due to heating usage of electricity. Tenants understand this and understandably want to avoid these costs. After all, most tenants are on lower incomes and find it difficult to afford bills of this nature. I am not buying any more electrically heated units and I am not alone in this.More directly, if I had anticipated the consequences of these rate rises I would have made $20,000+ more per unit for every unit that I could have bought gas but instead bought an electrically heated unit. I am selling one electrically heated unit this summer, and in another I have increased the insulation and put programmable baseboard thermostats in an effort to mitigate bills for tenants. But the long term answer is clear: don't buy electrically heated units if electricity rates are high or rising.

Mike Palmer · Answer

So it electric radiant heat? You can call Rocky Mountain and they will give you the average monthly use over whatever period of time you want, and they can give you an idea what the monthly equal payment amount would be so you can compare to what you have been paying to compare.

Adam McCarty · Answer

I have all electric in my house however it is with a geothermal forced air unit. My house is a 2500 sq ft ranch with a full basement. My bills this last winter hardly topped $200 per month. It all depends on the way you are using the electric on how much it cost.

Tim Steele · Answer

I restored a two story 2,600 Sq ft house. Completely gutted, I decided to go all electric to save money. The electrician advised against it. No no, I told him. These baseboard heaters will be fine. I did the research and they are much more energy efficient than they use to be. We went all electric. Tenant barely made it through the winter with $600 month utility bills. The following summer I had a gas furnace installed. Iowa gets cold too. My energy efficient baseboard heaters were nothing compared to a gas furnace.

Stephen E. · Answer

Are you planning on including utilities or having the tenant pay them themselves? $150 a month would compress margins and make for a significantly less attractive property. If you understand what is going to happen with the shift to renewable (and more expensive) sources of electricity these bills are headed only in one direction - upwards. My own decision has been to simply not buy electric heated units. I think they are an expensive liability and it is going to be increasingly difficult to find tenants that want to live in them and bear the costs of electricity, whether directly or indirectly.

Skyler Smith · Answer

I'd take a price reduction for *any* reason 😜 There's nothing wrong with asking the seller for a concession based on high utility prices. Not all sellers will go for it. I think the best course of action is going back to a spreadsheet and running the numbers and deciding if this purchase still fits your goals. I have a property that I pay the heat for - and the highest it went this winter was $750/month. Yikes! That number looks awful, but if you look at it in the big picture the property still makes sense for what I'm trying to do.

Lisa B. · Answer

Are solar power or geothermal radiant heating/cooling possible (although initially expensive) practical solutions to existing all electric buildings?

Terry Walby · Answer

I just moved to a retirement community. All electric is terrible as far as I see. I have to lower the heat to 55 when I go to work and bed. So the heat is set at 67 in the living room and dining room for about 4 hours weekday and from 7 to 10 week nights. The rest of the house is set at 45. My electric bill this Dec was $377 and it hasn't even gotten to 32 degrees this winter until 2 days ago. How do people say this is cheaper?

Mimi H. · Answer

This will depend greatly on a number of factors, including insulation. In apartments in northern California, many are poorly insulated and as a result, electric heating (non radiant) is much MUCH more expensive than gas. You could potentially ask to see the utilities for the building for the colder months to get a gauge on if it's within your comfort level.On the Solar front, EXTREMELY expensive to install (at least in NY) however, there were some very nice programs which picked up a large portion of the cost (like, 70%!) so if you go that route, I'd check with the local / state government to see if there are any energy credits (that's not the proper term btw, the proper term escapes me). And lastly, negotiate the heck out of it. :)

Samuel Sedore · Answer

It depends on your opinion of practical. Last time I checked the solar panel payback period was in between 20 and 25 years. If you have a large excess of capital and the 20-25 year payback makes sense then it may be a good idea. Although for the average investor it makes no sense to me that they would spend it on this the money could be better used elsewhere.It would be cheaper to have your units meters separated and pass on 100% of the cost.