How to make tenants pay for radiator heating and how does it work

Question

Hi BP!

I need help on radiator heat. I have never lived in a home with it and am just a little confused as to how to how it's expense works. Is there anyway to make tenants pay for the fuel? How can I tell if it is heated by gas or electric? I am looking at a fourplex and there are 5 electric meters, one water heater and a newer (8 years old) energy star boiler. Is one water heater and the boiler enough for all four units to get enough hot water and pressure all at the same time? Thank you in advance.

Frank Chin · Answer

My plumber advised that I should have 25/gallons per unit provided I have no more than 2 or 3 people per unit. In your case, it'll be a 100 gallon tank for 4 units. I've gotten away with 50 gallon tanks over the years for a 3-plex. The only complaint I had was when everyone take showers in the morning at 8:00AM, there's not enough hot water.

Told the retired gentlemen who complained to take his shower in the afternoon when everyone's working.

One giveaway the tank is on the small is how long it lasts. My 50 gallon tank in the 3-plex only lasted 5 to 7 years. I don't recall what the warranty on them are, but I got a replacement directly from the company at a reduced price since it lasted less than the warranty period, I recall I got it more than once, but that's for more than one property. My plumber said that's the result of using too small a tank. A properly sized 75 gallon tank for a 3-plex should last me the 10 years, the expected life of the tank. That property I owned for 25 years before I sold it, and I believe I ran through 4 hot water tanks.

Oh, I could never find the warranty papers when the water tank goes. I finally wrote the date of installation on the tank itself with a magic marker. I believe if it's within the 5 to 7 year range it's under warranty, and if you call the maker of the tank, they will have your serial number on file if you sent the warranty registration in originally. But my plumber took care of it all, calling the maker of the tank, have it delivered to my house, and installing it

Ryan Murdock · Answer

@Michelle Bright You can jump through all sorts of hoops to try and split the expense of one heating system across 4 units but whatever the outcome you will still have to adjust their monthly rent down to offset the heating cost you are now holding them accountable for. Why go through the hassle?

Make sure your heating system is cleaned and tuned annually, do what you can to make the building as efficient as you can (windows, insulation, etc), and penalize the tenants for negligent abuse (like leaving windows wide open with the heat on). You can also install locking and/or programmable thermostats. Build the heating costs into your rent price and save yourself a ton of aggravation.

As for the hot water heater - if it's not broken why fix it? They are easy enough to swap out down the road if you find it isn't large enough to meet demand. The current one may be more than sufficient so it'd be a waste to replace it without knowing for certain.

Michelle Bright · Answer

Oh sorry to answer your questions I didn't see a meter on the property. Also the hot water heater is 50 gallons. I spoke to the only tenant (3 vacant units) and he said that he's never had any issue with the hot water when others were living there. I find that interesting. Any recommendations on changing the hot water heater to a larger size? Is that large enough for 4 units??

Thanks!

Michelle Bright · Answer

Thank you everyone for you're responses. I think I will have to find a way to put the heat back on the tenant. There are is also baseboard heating and the tenants will be paying their own electric bill. Are they able to control the temperature of the radiator heat with the thermostat? Thanks again for all the help!

Dick Stevens · Answer

With this setup the landlord pays heat and hot water.  You can charge extra for rent with the heat and hot water included.

Ceasar Rosas · Answer

Do you have gas meters? If so how many? 1 boiler and 1 hot water heater can be enough but depending on the capacity. Do you have a larger boiler and how many gallons does your hot water tank hold? The only way to pass those charges to your tenants will be to install separate boilers and hot water tanks for each. I'm not sure if you can sub meter that at all, but maybe look into it.

Thomas S. · Answer

5 meters means there one for each unit and one for the common heat and water.

The boiler and water heater are the supply of heat and hot water for all units.

The only way to realistically bill for the 5th meter is to add it to the rent. You will need the records of billings for the previous couple of years to estimate a monthly cost to add to the rent.

Problem is rents are set by market. Charging more than market may not fly with tenants. Generally it is added as one of your expenses to calculate the value of the property. A 4 plex should be valued by cap rate.

Frank Chin · Answer

If that's what you have, you mostly likely have gas generated heat, and gas hot water in one hot water tank.

The fourplex has one meter for the gas boiler and hot water, and cooking gas. I owned duplexes and 3-plexes thu the years and always supplied heat and hot water, as well as water. You probably have one water meter. Most duplexes are built with two gas meters, one for the owner that's hooked up to the boiler, hot water tank, owner cooking gas, and the other for the tenant's cooking gas.

As for electric, you have one meter for the owner for common areas, boiler, hot water tank, and one each for the tenant's unit.