Oil vs Electric ??

ScottMP

Who buys and rehabs houses to resell at ( hopefully ) a profit. We have a done about five of these with him now.

He has recently purchased a home that has electric heat. I of course said rip it out and install a oil boiler with baseboard. This is a large expense to the project. My thinking is it will sell faster with oil than with electric baseboard. If the house sits on the market it does no good.

He has checked the bills and found that the normal electric bill in the summer is around $ 75.00. It jumps to $ 350.00 during the winter so the heating bill is $ 275.00 a month.

New heating system will be around $ 15,000.00.

Your input would be very heplfull. I am going to tell him to read this post, so this will help him make a decision.

I told him we had to ask the best and the brightest :)

Thanks Guys

Scott

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Wild Bill

Similar situation, Scott

I am going to be quoting a women on conerting a 2000 sq. ft. home from electric to oil. Her electric bill for last January (in the fozen Northeast was $900.00) Her yearly bill is about $5,000.00. She inherited the house about 5 years ago, I feel if she had converted it back then, the system would have paid for itself by now!!!
I will tell her to read these posts as well!!
Good luck,
Bill

Mike T., Swampeast MO

A Few Ideas

Presuming that he uses a realtor to sell the houses, his agent should easily be able to compare listing time of comparable homes with oil vs. electric heat.

If the conversion is going to cost him around 15k, then to make it worth his while, he's going to want to sell the house for at least 15k additional. If this keeps the price below or at that of comparables, then there shouldn't be anything to loose--particularly if those with electric heat tend to stay on the market longer... Again, the realtor can provide this information easily--MLS and computers made this absurdly simple.

From a the point of view of the purchaser, 15k @ 8% over 30 years amounts to about $110 per month for the life of the mortgage. That's a pretty hefty amount to overcome for "payback"... If this is a home for people of modest means, the existing electric heat might actually become a "good" thing if the price is lower and considering that heating oil probably won't be as much as a comparative bargain for the forseeable future.

Rookie_3

What area is the house in? Northeast will be no problem getting rid of it with electric heat. Houses are going on lots side-ways, on hill sides, no yards, and still selling quick and high priced. Areas where the sales are a little slower could be a different story, everyone avoids electric heat when they have a choice. Even If he comes in $10,000 under on the sale because of the electric heat he is still $5,000 ahead. As for Wild Bills lady unless she is going to sell the house soon the numbers speak for themself. She could have a new system paid for in no time with what electric is costing her now.

Just an opinion....good luck Dan

Weezbo

heres what you say....

"in a winter month the bills are quite high,and in order to get a loan one needs to budget their dollars to make payments and continue on in the good work they have started". every home your buddy remodels a n d sells brings in a pay check..should he start out early gaining a good rep...more realators will trust his work...if you were into hanging "with" as they say then your rep is getting the same scrutiny in the light of day. now when a home doesnt sell because the customer cannot afford radicaly changing energy bills then he has to hold it and pay the bills himself...once the cost of that sinks in...he will probably be thinking things cost Too much and he cant make any money at it...then hanging "with" is going to be your Liability...

Unknown

Timely question Scott

I just started an electric to oil conversion today . Buderus boiler and indirect , oil tank outside and prefab chimney . The batteries were dead so I didn't get any pics of the lack of progress so far . There is a new homeowner since April , so they missed the high electric bill . I'll ask if she knows what the former owner paid for heat .

The Farmer's Almanac said we're gonna have another cold winter , and if the prices are as crazy for electric as they are down here , I think the selling price will be higher with fuel burning equipment . And not to forget the excellent work you do - that alone will bring the price up a few notches .