Heating costs - gas vs electric

[dnaumis]

Hello,
We`ve been looking at townhomes and many of them come with electric baseboard heating. Would this be a deterrent to potential tenants that would have to pay utilities? Would tenants prefer gas heating or it would not matter one way or the other?
Thanks,
Debbie

 

[housingrental]

Yes, just like purchasing people will factor this in. I`ve had many potential renters not want to rent places with electric heat unless utilities are included in rent - irrantionally so to the point of having people offer me apx. double the cost of utilities in increased rent.

 

[Thomas Beyer]

QUOTE (dnaumis @ Aug 6 2008, 01:16 PM) Hello,
We`ve been looking at townhomes and many of them come with electric baseboard heating. Would this be a deterrent to potential tenants that would have to pay utilities? Would tenants prefer gas heating or it would not matter one way or the other?
Thanks,
Debbie


If you can, buy ONLY apartments with electric baseboards, as utilities are the highest expenses in any property. Ideally the tenant pays it and not you !

Rent has to reflect if utilities are included or not.

Every year utilities go up, so best to not have that as a cost, especially in rent controlled parts of the world like BC or ON !

 

[dnaumis]

The assumption would be that the tenants pay the utilities. What I`m trying to figure out is whether the tenants would have a preference to electric or gas if they have to pay for their own heating costs. Would you be recommending electric then?

QUOTE (thomasbeyer2000 @ Aug 6 2008, 04:01 PM) If you can, buy ONLY apartments with electric baseboards, as utilities are the highest expenses in any property. Ideally the tenant pays it and not you !

Rent has to reflect if utilities are included or not.

Every year utilities go up, so best to not have that as a cost, especially in rent controlled parts of the world like BC or ON !

 

[writeabooknow]

As has already been mentioned in this thread, logical thought isn`t always what you`re dealing with. Over the past few years... okay, decades, most people have found that heating by natural gas has been less costly compared to what their friends or neighbours pay with electricity. But their friends and neighbours don`t live in identical houses as they do and don`t have the same demands for heat. Every house is different and every person/family is different. You`re always comparing apples with oranges. Even if you could compare tdhem straight up, side by side, different people have different peferences and prejudices.

There is definitely a `mindset` that natural gas is `better.` However these are the same folks who prefer an electric stove to a gas range, go figure!

I do know that several realtors have experienced a negative reaction to electric heat from potential buyers. On the other hand, people who have been raised with electric heat prefer the precision of heating one room, but not another. People who have been raised with natural gas assume, rightly or wrongly, that the costs of electric heat will be prohibitive.

In either case, if you`re renting a place with one or the other, play up the advantages of what you have. The actual or perceived lower costs of natural gas, or the precision and instant comfort provided by electric heat. It`s a sales situation.

Cheers,
Steve

 

[kboughen]

QUOTE (dnaumis @ Aug 6 2008, 03:16 PM) Hello,
We`ve been looking at townhomes and many of them come with electric baseboard heating. Would this be a deterrent to potential tenants that would have to pay utilities? Would tenants prefer gas heating or it would not matter one way or the other?
Thanks,
Debbie

I was considering buying townhomes with baseboard heating and started to ask all my potential tenants what they thought of the idea. It was unanimous; they all stayed away from homes with electric heat. Regardless of what the actual numbers may indicate, sometimes "perception is reality", and I would not want to deter equity building tenants. Before making an offer on a baseboard heated house, I always build in the cost for adding a forced air gas furnace with A/C.

 

[housingrental]

Also of note lack of air flow can be an issue with non forced air system (ie ebb)

 

[Thomas Beyer]

if you can, ALWAYS ALWAYS buy houses/town houses/apartments/condos where you (the landlord) do not have to pay for heat !!

With ON and Europe moving to smart metering (i.e. cost of electricity is based on hours of the day, i.e. cheaper @ night) .. this WILL also happen in BC, SK, AB or MB ..

 

[TommyK]

This is an interesting topic as I have been struggling to find apartment-style condos in which condo fee DOES NOT include water/heat (and almost 100% of high-rises have heating cost built-in the strata fee). I have also talked to a few contractors who have worked for some of the condo buildings in Edmonton. They all tell me that most apartment-style condos INCLUDE water/heat in the strata fee. The reason is that centralized heating system is easier to build and is more cost-efficient per unit. But as a landlord, this means that my cost can only go up higher each year as heat/water always go up. And once the condo fee is raised to accomodate the increasing heating cost, the fee rarely goes down. So my cost can go up each year, yet my rent might not go up each year depending on the market.

For those of you who invest in apartment-style condos, do you focus your effort on condos that DO NOT include water/heat in the strata fee so that your tenants have to pay their own utilities?

My research in Edmonton left me with very few buildings to pick from. And those ones tend to be fairly expensive (as I have been told that the cost of having separate heating system is way more expensive than having a central system; and they are sometims more unrealible than centralized system).

I mean this is one reason why a lot of REIN investors are going after townhouses in which utilities are fully paid by tenants! Smart strategy.


Tommy

QUOTE (thomasbeyer2000 @ Aug 6 2008, 08:30 PM) if you can, ALWAYS ALWAYS buy houses/town houses/apartments/condos where you (the landlord) do not have to pay for heat !!

With ON and Europe moving to smart metering (i.e. cost of electricity is based on hours of the day, i.e. cheaper @ night) .. this WILL also happen in BC, SK, AB or MB ..

 

[dnaumis]

Thanks for all the great feedback. Much appreciated

Debbie

QUOTE (TommyK @ Aug 7 2008, 02:51 AM) This is an interesting topic as I have been struggling to find apartment-style condos in which condo fee DOES NOT include water/heat (and almost 100% of high-rises have heating cost built-in the strata fee). I have also talked to a few contractors who have worked for some of the condo buildings in Edmonton. They all tell me that most apartment-style condos INCLUDE water/heat in the strata fee. The reason is that centralized heating system is easier to build and is more cost-efficient per unit. But as a landlord, this means that my cost can only go up higher each year as heat/water always go up. And once the condo fee is raised to accomodate the increasing heating cost, the fee rarely goes down. So my cost can go up each year, yet my rent might not go up each year depending on the market.

For those of you who invest in apartment-style condos, do you focus your effort on condos that DO NOT include water/heat in the strata fee so that your tenants have to pay their own utilities?

My research in Edmonton left me with very few buildings to pick from. And those ones tend to be fairly expensive (as I have been told that the cost of having separate heating system is way more expensive than having a central system; and they are sometims more unrealible than centralized system).

I mean this is one reason why a lot of REIN investors are going after townhouses in which utilities are fully paid by tenants! Smart strategy.


Tommy

 

[samwei]

QUOTE (TommyK @ Aug 7 2008, 12:51 AM) This is an interesting topic as I have been struggling to find apartment-style condos in which condo fee DOES NOT include water/heat .For those of you who invest in apartment-style condos, do you focus your effort on condos that DO NOT include water/heat in the strata fee so that your tenants have to pay their own utilities?

My research in Edmonton left me with very few buildings to pick from. And those ones tend to be fairly expensive (as I have been told that the cost of having separate heating system is way more expensive than having a central system; and they are sometims more unrealible than centralized system).

I mean this is one reason why a lot of REIN investors are going after townhouses in which utilities are fully paid by tenants! Smart strategy.


Tommy

Hi Tommy, you can find the newer apartment style condos which have their own heating, electricity and water systems individually by searching for condos built by Tessco. These are the ones with 4 or 5 storeys, central courtyards, external pedways, underground parking. The furnaces can be either inside the unit or in a storage room on the balcony. Some of these would be Grandin Gates, Glenora Gates, Gates on Twelfth, The View etc.

You can find the cheaper, older types on the south side and west end, but the condo fees in these are much higher, because the maintenance costs are much higher.

As an aside, Alberta regulations stipulate that a condo complex has to have a Condo Reserve Fund Study (equivalent of a physical inspection of the entire condo building, physical and systems) every five years and allocate funds for every component (like a budget) for the next 25 years or so of maintenance.

Since heating and utility , maintenance and repair costs have gone through the roof in the past 3 years, you can expect virtually every condo board to be underfunded after the latest Reserve Fund Study is done, and condo fees raised significantly or lots of special levies arising.

sam

 

[TommyK]

QUOTE (samwei @ Aug 7 2008, 09:21 PM) Hi Tommy, you can find the newer apartment style condos which have their own heating, electricity and water systems individually by searching for condos built by Tessco. These are the ones with 4 or 5 storeys, central courtyards, external pedways, underground parking. The furnaces can be either inside the unit or in a storage room on the balcony. Some of these would be Grandin Gates, Glenora Gates, Gates on Twelfth, The View etc.
You can find the cheaper, older types on the south side and west end, but the condo fees in these are much higher, because the maintenance costs are much higher.

As an aside, Alberta regulations stipulate that a condo complex has to have a Condo Reserve Fund Study (equivalent of a physical inspection of the entire condo building, physical and systems) every five years and allocate funds for every component (like a budget) for the next 25 years or so of maintenance.

Since heating and utility , maintenance and repair costs have gone through the roof in the past 3 years, you can expect virtually every condo board to be underfunded after the latest Reserve Fund Study is done, and condo fees raised significantly or lots of special levies arising.

sam

Sam,

Thank you so much for the information. I actually have been looking at Tessco`s project. I personally love Grandin Court, 9828 112st, because of its superb location and convenience. From what I have heard from the local contractor, he also recommended me to look at Tesssco`s projects. But other than that, it is hard to find separate heating/water system in d/t and other parts of Edmonton.

My investment focus is on apartment-style condos. I particularly like this because they are hassle and maintenance free. I understand that townhouses are like this as well, but I have concerns with 30-year-old townhouses that require reno works. I am not handy and reno work can eat up a lot of my budget. I am looking at newer townhouses and apartment condos.

Have you invested in any of Tessco`s projects? Or, have any of your clients bought into Tessco`s projects?

I heard that the company has run into trouble with selling reserved public parkings! Sure not going to make visitors happy!

If you have, how do you find their buildings?

Thank you!
Tommy

 

[samwei]

QUOTE (TommyK @ Aug 8 2008, 12:43 AM) Sam,


My investment focus is on apartment-style condos. I particularly like this because they are hassle and maintenance free. I understand that townhouses are like this as well, but I have concerns with 30-year-old townhouses that require reno works. I am not handy and reno work can eat up a lot of my budget. I am looking at newer townhouses and apartment condos.

Have you invested in any of Tessco`s projects? Or, have any of your clients bought into Tessco`s projects?

If you have, how do you find their buildings?

Thank you!
Tommy

Hi Tommy,

My investment focus is in suited homes, so I do not invest in townhouses or apartment condos such as Tessco`s projects. I do have clients who have bought condos in these projects, but not as investors, only as personal residences.

As a realtor, (or as your realtor can do), it`s easy to find townhouses or apartment condos which have their own heating system because you can do a detailed search with a criterion for "Heat not included with condo fees".

If you`d like, you can log on as a guest on my website and see if it`s helpful.

For your info, here is a partial list of Tessco`s projects with their own separate heating, electric and water individually metered systems:
* Garneau Lofts 10711-83 Av
* Garneau Gates 11025/11039- 83 Av
* Gates on 12th 10147-112 St
* Terrace Court 10503-98 Ave
* Grandin gates 10023-110 St
* Rossdale Court 9804-101 St
* Grandin Gates 9828-112 St
* The View 9503/07-101 Av
* Southview Court 4823/27,31/35-104A St
* Glenora Gates 10403-122 St
* Parkside Court 11933-106 Av
* Gates on 117th 10531-117 St

There are also some at:
* Railtown 10235-111 St
* River Grande 9008-99 Av

Hope this helps.
Sam

 

[TommyK]

edited