Should heat billl be a deal breaker?

[Jordan R.]

Looking  at a triplex and the only issue is the current heating bill (Electric Boiler and electric secondary). There are two one-bedroom and one two-bedroom. The current owner pays for heat. This property cashflows in the summer but breaks even or loses some money in the winter. I don't we can safely pass the heat on to the tenants in my market.

I've ran a bunch of conservative numbers on if we can reduce the heating bill by a couple hundred dollars a month in the winter, we would be cashflowing $600-700 per month. (Feb is $1300 for heat alone)

Should I be judging a deal based on reducing heat to meet my cashflow numbers or walk away? I do believe and am quite confident that we can reduce the heat bill by possibly installing new windows, added insulation, some form of heat regulator on the boiler or even new lease policies?  (I believe the 2 bedroom apartment is leaving the windows open in the winter.)

Thank you!

[Vinod Dasani]

@Jordan R. - I personally dont think its worth the efforts. If the property is not cash flow positive throughout the year I wouldnt bother. The plan you have to reduce the bill requires money and that investment then adds to your price. Have you calculated the cost for getting that work done? Doesn't the new investment then reduce your ROI during the summer months too then? Moreover you cannot guarantee that the bills will in fact go down and by how much.