GeoThermal

[MikeMcC874]

I am taking possession of my first rental property this Friday. It is a 75-100 year old Victorian that has been converted into a triplex. I bought it knowing it needed a fair bit of work. Needs a new roof, downspouts, windows etc. It is fully tenanted and hopefully going to cash flow for me in fairly short order.

Currently the property is inclusive and has 2 25 year old furnaces, 3 rented water heaters and an electric space heater providing the heat to the upper bachelor. A friend recently had geothermal installed and is very happy.

Here are my thoughts:

• Based on the current rebates available here in Ontario, I should be able to get about 9-10k back on this.
• My furnaces are coming to the end of life and will probably cost me 10k to replace.
• 3 water heater rentals are costing me every month.The inefficiency of 3 water heaters and 2 old furnaces makes for some non-trivial bills. (even after I replace the windows)I believe I will be able to add air conditioning to the list features in my property (and increase revenue accordingly).

I have not gotten the estimate yet and don`t have all the data on the current utilities yet but I was looking for opinions on geothermal in general and on the cost effectiveness of such conversions.

Thoughts?

Thanks
Mike

 

[TodorYordanov]

QUOTE (MikeMcC874 @ Nov 30 2009, 05:28 PM) I am taking possession of my first rental property this Friday. It is a 75-100 year old Victorian that has been converted into a triplex. I bought it knowing it needed a fair bit of work. Needs a new roof, downspouts, windows etc. It is fully tenanted and hopefully going to cash flow for me in fairly short order.

Currently the property is inclusive and has 2 25 year old furnaces, 3 rented water heaters and an electric space heater providing the heat to the upper bachelor. A friend recently had geothermal installed and is very happy.

Here are my thoughts:

• Based on the current rebates available here in Ontario, I should be able to get about 9-10k back on this.
• My furnaces are coming to the end of life and will probably cost me 10k to replace.
• 3 water heater rentals are costing me every month.The inefficiency of 3 water heaters and 2 old furnaces makes for some non-trivial bills. (even after I replace the windows)I believe I will be able to add air conditioning to the list features in my property (and increase revenue accordingly).

I have not gotten the estimate yet and don`t have all the data on the current utilities yet but I was looking for opinions on geothermal in general and on the cost effectiveness of such conversions.

Thoughts?

Thanks
Mike


GeoThermal is expensive to install and the payback is 10+ years. I installed one in my house last February.
The filter must be cleaned regularly and the temperature difference between night and day settings should be within 2-3 degrees for the system to operate most efficiently. it is great and comfortable heat.
However all units will have to live with the same temperature and not be able to adjust it.
Look up Yanch heating based in Barrie. They are the most experienced installers in Ontario and will travel to you for an estimate.
PM me if you have specific questions.

 

[RanjitPlaha]

Are the rebates available on rental properties?

 

[invst4profit]

Ideally with a rental you want the tenants on separate utilities. Utilities extra.
If you can go that route, in the future, with new tenants that is the direction you should be going and investing your money.
Pay back is of far less importance when tenants are paying the bill.
If separate utilities is not possible opt for the most cost effective price wise as the payback on what ever you chose will not be significant.
Keep it conventional, stay with basic heating.

 

[TerryKruse]

QUOTE (invst4profit @ Dec 4 2009, 05:23 PM) Ideally with a rental you want the tenants on separate utilities. Utilities extra.
If you can go that route, in the future, with new tenants that is the direction you should be going and investing your money.
Pay back is of far less importance when tenants are paying the bill.
If separate utilities is not possible opt for the most cost effective price wise as the payback on what ever you chose will not be significant.
Keep it conventional, stay with basic heating.

Does adding Geothermal make the home more desirable? I think it would to the "right" tenants and therefore you could demand more rent to compensate...

Just my 2 cents.

Cheers, Terry

 

[invst4profit]

I can`t see that tenants would care about the type of heating unit. The likelihood is the higher rent would reduce your tenant pool to such a small number that you would never find a tenant.
A landlord should make decisions based on cost keeping in mind it is a rental property. Basic and practical with the bottom line in mind. Of course if a investor is saddled with the utilities there are many other factors in play than simply choosing a furnace.
Being concerned about climate change and such may be popular today but should be confined to personal use. Up front cost should outweigh long term payback. Of course there are things you can do to help even in rentals but conventional thinking is usually more cost efficient.
Over priced or vacant is not a good investment to anyone.

 

[MONEY]

If you go `Geothermal` you can literally be your own utility company. Therefore you can charge your tenants for heating/cooling just like the current utility company is doing. If you wish, you could also retain this infrastructure should you wish to sell, and then continue billing the new owners of the property for the heating/cooling costs. (just like hot water heater renting companies)

It`s just another form of passive income.

 

[RCrein]

Hi Mike,

I have a horizontal closed-loop groundsource heat pump in my house and we are very happy with it. It is installed in the home my wife and I built two years ago. The house is twice the size of our previous 40 year old bungalow and better insulated. The upside is that our utility bills are half of what they were in the old house. Part of this is because we have eliminated the need for a natural gas connection, for which there are monthly charges irrespective of consumption.

I don`t think you can charge more for using a heatpump but if you are using a forced-air solution it gives you a very economical way to air condition. This will cost but is also added-value that you can charge for. The basic payoff is saving on your utility bills and is a longer term investment perhaps 7-10 years. Given the multi-family investment usage, possible elimination of other costs, preheating hot water, possible rebates and adding depreciation you should run some numbers yourself. I think you mentioned that you had two furnaces. Hopefully you can combine them. For your reference, the two largest manufacturers are waterfurnace and climatemaster.

Groundsource heat pumps require fluid (water with alcohol as antifreeze) to circulate underground. The larger the property heated/cooled, the larger the loop required. In large lots a horizontal loops can be installed in six foot deep trenches. Something like 500 feet per ton (size of furnace, you probably need 5 ton or more given multi-family) which is cheaper to install. In smaller lots the solution is drilling vertically. More money.

In an existing building you will have some challenges retrofitting a heatpump. Unlike forced-air combustion furnaces, the heat is produced more gradually and requires larger ductwork. Knowledgeable design required. The registers remain the same size, but significantly more air flow is required. Also the plenum should be insulated to lower noise. A multi-tenant building raises the challenge of controlling multiple zones, which might be difficult with a force-air solution. If you are currently using boilers for hot water, a radiant heat pump might be the easiest to integrate but you lose the airconditioning.

Hope these comments help in some way. Best of luck.

 

[Karma]

I would consider getting an energy audit done and then look at installing new high efficiency furnaces and keep them tied to each of the units. If you don`t need any CCA deduction or don`t want to outlay the money look at renting the units which then become fully deductible while still qualifying for the rebates which you can pocket. I`m currently in the middle of this with my rental unit. I`m going to be able to rent a high efficiency unit for approx. 60/month, pocket the 1300 rebate and since I have lots of CCA and other deductions I`ll be able to deduct 42% (my tax bracket) of the 60/month so it doesn`t end up being that expensive. I`ve checked with OEE to confirm that rental furnaces, etc. qualify for the rebate and they do. In addition we rent our unit including utilities so it will only save me money and I have no hassles or maintenance with furnace.

 

[Emil1753]

QUOTE (Karma @ Dec 10 2009, 09:36 PM) I would consider getting an energy audit done and then look at installing new high efficiency furnaces and keep them tied to each of the units. If you don`t need any CCA deduction or don`t want to outlay the money look at renting the units which then become fully deductible while still qualifying for the rebates which you can pocket. I`m currently in the middle of this with my rental unit. I`m going to be able to rent a high efficiency unit for approx. 60/month, pocket the 1300 rebate and since I have lots of CCA and other deductions I`ll be able to deduct 42% (my tax bracket) of the 60/month so it doesn`t end up being that expensive. I`ve checked with OEE to confirm that rental furnaces, etc. qualify for the rebate and they do. In addition we rent our unit including utilities so it will only save me money and I have no hassles or maintenance with furnace.


I`m impressed.

Well done.