Separating water/radiator heating back to tenants - ROI check

[Abby S.]

My 4 unit is at $4800 in gas for the year with budget billing, which is on me to pay. This is one large water heater tank (75gal)  in the basement, alongside a boiler that feeds the radiators throughout.

In planning for some work in the building, I have the opportunity to install separate water heaters in each unit. A few questions:

- If I can offload that cost amongst the tenants assuming a 6% cap rate, $4800/.06 = $80k in added equity?

- The work would be part of a larger project, but let's say that with running gas, electric & installing separate tanks, as well as furnaces - I'm at $18k (total swag) for the parts/labor on all four units. Then the ROI on that is $18000/4800 = 45 months?

- Is the simple CoC return math here 4800/1800 = 27%?

[Kevin Sobilo]

@Abby S., you seem to be assuming your rents stay the same. A unit with heat and water included is worth MORE than one where the tenant pays those utilities. So, if you are at market rate rents, you might want to use lower rent rates because market rents for those units will now be lower.