Electric or Gas Heating?

Question

Hi All!

I recently purchased a 3 family and noticed that the property has a central gas heating system/furnace. Since it is a 3 family home and I do not want to be liable for paying the gas bill for all 3 units, I have opted to separate the heating utilities. I have received mixed information from other real estate investor/mentors in the area who say to go electric as it is cheaper to install. The other side to this is, if I go with electric heating the cost to the tenants during the winter will be astronomical, this will in turn drive the tenants away and they will search for better housing.

In my other rentals I have separate gas heating but don't know what the expense is to install. I think gas heating is better as it is cheaper to heat. My plan is to get a plumber/HVAC company out to give me a quote on adding two furnaces to the property or submetering .

Please let me know your thoughts on this, especially if you have separated the utilities in your rentals before. Any advice or ideas would be greatly appreciated. As of right now my decision to either go electric or gas is holding up my reno.

Thanks

Ashton Astillero · Answer

I'd vote for gas. It's straightforward for HVAC techs to do since they can handle the little electrical and plumbing involved. If you opt for electric, the HVAC techs might not think like an electrician wherein the electrician will probably have to, 1) establish a new circuit with breakers rated for the furnace; 2), run higher gauge wires and/or piping to handle more juice that the electric furnace will require. If the existing panel doesn't have enough amperage, you might need to upgrade the service to the house. And if you do all the aforementioned things, though uncommon, power can still go out for a myriad of reasons. I don't remember my gas being ever turned off ever, but I know I've lost power a handful of times.

Kevin Enderle · Answer

Gas is a lot cheaper for your tenant to run. That means they are more likely to be able to afford to pay the rent. Yes, a bit more Cap-X up front, but brings higher value and more rental upside as you can advertise Gas furnace to save money during the winter. Upgrading the Attic insulation is also a relatively cheap thing to do that can pay big dividends by lowering tenant costs so you can recoup it in marginal rent.  I just put in Gas and upped the attic to R-60.

Electric or Gas Heating?

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