We are looking at putting propane heat in our rental house. We have only been able to get 1 quote from a contractor. The other ones we have contacted us have not got back to us.

The current heat source of the house is electric. The house is a side by side duplex, each with a 600 sq fr basement and first floor.

The price quoted was $10,000 per side. This includes:
American Standard Propane forced hot air furnace 97% Efficiency .
New ductwork five vents and return on first floor
2 vents and return in basement. (Walk out)
All duct work is metal and insulated.
All electrical work
All gas pipe work to connect furnace and tanks.
Permits

Propane tanks provided by Propane company in cost of propane. (Price discount is not worth purchasing)

The house is located in Western MA. Does this price sound reasonable? I am still trying to get at least a second quote.

Thank you to anyone who has any input.

Do your tenants pay the utility bills? If they do, do you think the rent can be increased enough to pay for the conversion to propane? I had a rental heated by propane and the idiot tenant couldn’t “afford” to buy propane. She bought a bunch of electric heaters that ended up ruining the outlets they were plugged into. It’s a wonder she didn’t burn the house down.

I believe I’d just stay with central electric heat.

I do property tax assessing - it's like doing house appraisals, only doing hundreds in a group rather than one at a time - so I see a lot of houses. Many of the houses I've looked at have been through this, and talking to the owners that had it done, your bid isn't out of line. The most recent was two years ago, an Amish-built home (hence, no furnace nor ductwork) of about 1600 feet per floor with an unfinished basement, and I think the cost was about $17,000.

The tenants running out of propane would be my fear. In Ohio the electric company can't shut them off in the cold. The natural gas company can't either. If they don't buy then you are in the situation that armfel is describing. While the $10k doesn't seem way out of line to me it seems the pay back to you would be a long time.

Why do the ducts need replacing? Gas and electric have no effect on the volume of air that needs to be circulated.

Electric baseboard vs forced air.

Is your electricity expensive where you live? Propane prices can be pretty erratic and you have no control over them. In the last five years I have seen propane vary from $1.20 a gallon to $6.00 a gallon. The price of my electricity has pretty much stayed the same.

quote:

Propane tanks provided by Propane company in cost of propane. (Price discount is not worth purchasing)

Note that this (at least here in NC) is generally a rent-the-tank-forever situation, not an eventually-pay-off-the-tank situation. Propane companies around here won't supply to tanks owned by other propane companies. Here, the company that owns the tank is given a captive market. And so propane companies here have a two-tier pricing structure - one for customer-owned tanks that can freely purchase from any supplier, and a different, far higher, price, for their own captive customers.

In my home's situation, the price difference was well over a dollar per gallon, and the cost of the tank (20 year old, 500 gallon) was $500, so when I found this out, I bought it.

It may not matter as much if your renters are paying utilities (or it may matter a great deal if your prospective renters ask about historical heating bills) and it will definitely matter if you yourself are on the hook for the cost of the propane.

Suggestion:
1) ask the installing propane company what the cost would be to just buy the tank up front. Also ask them the current price/gallon they would charge if you owned it, and how much the price would be if you rented it.

2) check a couple different propane companies that service your area, and see whether they would deliver to tanks owned by their competitors. Ask them the price to deliver to your rental house assuming you owned the tank outright.

3) Estimate the number of gallons of propane you expect the house will use in a year. Multiply that times the difference/gallon between rented and owned deliveries, and you'll have a sense of what the tank rental costs/year are

4) Compare costs of rental found in #3 to cost of purchase (#1 above) to make a buy/rent decision.

Might also consider a heat pump, cost of operations is lower, no third party delivery, and cooling in the summer. Could even consider doing a couple of mini splits, leaving the baseboards in the rest of the house and skipping the ductwork.

What kind of electric heat? Electric baseboard?

I'd look at heat pump mini splits before putting in ductwork and converting to propane.

Then you would have central air as well as efficient electric heat, because baseboard is horribly inefficient and expensive.

Are you doing this to save your tenants money on utilities or to increase the sale value. If it were me, I'd spend the money on more insulation for a lot less investment.

Jim

Thanks for the info,
The House was built in 1989, 2x6 modular construction and well insulated. I had Mass save, check the place out and it needs nothing for insulation. 18+ inches in the attic.

The Electric is baseboard. We did look at heat pump options and the HVAC guy recommended against it and my brother who has one also said don't do it, due to his experience.

Our tenants pay the utilities, but had January heat bills of $650 and $700! Which was twice of what we were told the prior bills were. These high bills will pretty much make the place difficult to rent and probably would cause our current renters to move out on both sides. To be fair to them, we are reducing rent for Feb and March by $300 per month. Both renters want to stay long term.

The propane company is local and well regarded in the community. the cost of new tanks when compared to the discount is a 15 year payback, and the cost is about $100 more per year. The propane heat will be far cheaper than electric. I spoke with the service manager and he said most of their customers don't buy. They also have a remote monitoring to prevent running out.

We are pretty lucky in our area in that the rents are healthy and we fully screen the tenants. So they all have solid credit ratings.

If we don't spend the money, we will take hit on the rent we get for the units. Spending the money will pay for itself in 3-4 years, rather than reducing the rent. We probably could have rented each unit for another $100 or more per month had it not been electric.

I have a friend who was in the same exact boat; 3,000 sq foot house built in mid-80’s

For some reason the builder put in ducting for AC but electric baseboard heat.

They were getting monthly electric bills for $800(!) in the winter months so he had a natural gas forced air furnace installed and was able to use his existing ducting and his heating bills went from $800 a month to $100-$150 a month.

For the OP, the fact that it’s going to scare off future tenants, it may be worth doing.

Propane is going to cost a good bit more than natural gas.... in fact electric companies claim it cost more than efficient electric.

I wonder if you could by pass the whole house ducted system and just have zone heating with either mini-splits or even gas space heaters....

One of the facts HVAC folks don't want you to know is that heating an area / home with forced air is the least efficient way.

Unfortunately natural gas is not available. The only options are electric, oil or propane.

There is no solar potential the southern exposure is blocked by a steep hill and trees the block the sun in the afternoon and these are across the street on conservation land.

quote:

Originally posted by Baran:
Unfortunately natural gas is not available. The only options are electric, oil or propane.

There is no solar potential the southern exposure is blocked by a steep hill and trees the block the sun in the afternoon and these are across the street on conservation land.

I would really do a good comparison of electric vs propane as heat pump technology has gotten MUCH MUCH better in the past few years, even for your area of the country where they traditionally did not work well. They are so efficient these days that your backup (emergency) electric heat won't run nearly as much as older units and only in really subzero temps. It may be more cost effective to go heat pump than propane here.

quote:

Originally posted by Blume9mm:
Propane is going to cost a good bit more than natural gas.... in fact electric companies claim it cost more than efficient electric.

I wonder if you could by pass the whole house ducted system and just have zone heating with either mini-splits or even gas space heaters....

One of the facts HVAC folks don't want you to know is that heating an area / home with forced air is the least efficient way.

Please explain the "Efficient Electric" comment.

Ducting loss is a FACT, but a forced air heat pump or a forced air gas furnace is normally much cheaper than electric heat.
I say normally because every area has different fuel costs.

Didn't know us HVAC guys tried to hide anything.

.

Having built a few hundred energy efficient homes over the past few years I would suggest that if you are considering keeping the property for a few years (which it sounds like you are) is to consider a heat pump with a propane furnace piggy backed on it.

This is what we have been doing in our homes for over 15 years and what I have in my own home. When the temps are about 40 and above the heat pump will heat the home and when below the propane will kick in. The switch over temp can usually be adjusted from 32 to 40 degrees in many models.

The beauty of propane is if you can install a large enough tank fill the tank in August when nobody is buying propane and the cost will be less then buying it in January.

Another good thing about propane is most units an convert to NG if it ever becomes available. Will you have two tanks? How will you bill for it?
As you have found, electric is usually the most costly in colder climates. Heat pumps also do not seem to work as well in colder climates.