View Full Version : ROI for boiler replacement

10-22-2008, 01:51 PM
Hi all:

I have a three family house that is currently heated with a 1940 (!) Janitrol gas-fired hot water boiler. Most of the house has radiators, but there are a few baseboards and convectors. The house is divided into three discreet spaces, but has only one thermostat and zone. It is a woodframe house that is connected on both sides to other woodframe houses (brick firewalls on each side). I don't have heat loss numbers, but I know that the two side walls join heated space of the adjoining house. The basement is unheated except for heat loss from the boiler and pipes. I currently pay for all gas and water, so heat and hot water are my responsibility. Also, in NYC, there are very strict laws about temperatures between Oct and May, so most buildings are overheated to be sure the coldest rooms meet the standard. Not perfect, but there you have it. The fuel costs are pretty substantial with the existing system.

Ideally, I would like to convert to a system that allows me to have each apartment pay their own heat and hot water. So far, the only system for this that I have found is to put in three separate boilers, and replumb the radiators/baseboards by zone. Two apartments would have one zone each, and one apartment would have two. In addition, I would like each boiler to have the additional "zone" for hot water, in an integrated system (heat and hot water) with storage tank. I would also consider going with tankless water heaters, but after initial research, I think the demand would be such that the integrated boiler would be more efficient. I also want to go as high efficiency as I can afford, so I think modulating/condensor boilers may be the answer. I will have to re-route the exhaust, as I currently have a single-flue brick chimney that would not support three flues.

So here are the questions...
- Any other practical way to split the heat out? I know I could take the bill and divide it by square footage, and retroactively bill each unit, but without tenants having the ability to control their own usage, that gets prickly. Just building it into the rent means that the rent has to fluctuate with energy prices, or I price myself pretty high to leave a cushion.

- I am trying to come to an ROI (return on investment) calculation for just upgrading the boiler to something more efficient. I know how to do the calculation once I have an estimated cost of usage post-conversion, but how do I come up with that number? I could probably back into it if I knew the general efficiency of the 70yr old boiler, without a flue damper.

- If I do the entire 3-boiler system, the prices are around $30K, including professional asbestos abatement and followup air testing, upgrading gas supply to boiler room (there is sufficient supply to the house), additional meters, etc. These was heat only, not the integrated hot water. I assume the added integration would be another $5-$7K. That ROI calculation is easy enough because I would have no fuel costs. Total conversion cost, divided by annual fuel costs saved = number of years to break even.

- Given the above, any other things I should be thinking about (aside from the obvious, like insulation, windows, etc, which I am already addressing).

Dan B

10-22-2008, 03:30 PM
The data plate on the boiler probably lists input BTU and output BTU....output/input is a fair approximation of the efficiency.

Depending on the brand, some of the mod-con new boilers are over 94%. You'd want to do a heat load calculation. You probably can use a smaller one for the middle apartment since it has much less in outside walls. Depends on the layout, windows, etc. All of the mod-cons that I've looked at use pvc for both intake and exhaust. There's often a very fixed maximum length for these and you have to be careful about where they exhaust and intake are - you don't want the intake of one to be sucking the exhaust of anohter. This includes proximity to things like dryer vents, windows, and doors.

Bill Arden
10-22-2008, 06:34 PM
In the big scheme of things the savings going from 80% to let's say 90% will take a long time to pay off.

Even if the tenants have to pay for the fuel, the rent would have to be lowered in order to stay competitive with other buildings.

If I was going to spend $30K on a building, I'd look into having vertical wells drilled for a ground source heat pump. That way you could leave all the pipes and radiators the same and just reduce the total costs for the building.

I know electric rates in NYC are high, but you could use the existing boiler to make a "dual fuel" system.

10-22-2008, 07:01 PM
Manhatten is basically one huge metamorphic rock, so drilling could get quite expensive, if they would let you at all what with the subways, tunnels, etc. under there. Not sure about the other burrows.

Bill Arden
10-22-2008, 08:20 PM
Manhatten is basically one huge metamorphic rock, so drilling could get quite expensive, if they would let you at all what with the subways, tunnels, etc. under there. Not sure about the other burrows.


As I see things the heat billing questions between the tenants is not the issue since it all averages out in the long run.

I agree that the old boiler should be replaced if it's not efficient, but there are a lot of issues.
1. Condensing boilers don't generate steam for steam based radiators.
2. Insulation upgrades in old buildings like this usually have a shorter ROI.

I just don't like how he said "I would have no fuel costs" implying that after the conversion he could use 0 as the fuel costs since the tenants have to pay for it. But the tenants have to add the fuel costs to the rent in order to decide where to rent and this means that in the long run you would have to lower the rent to offset the heating costs.

10-23-2008, 07:12 AM
Thanks to all for the feedback.

- The input/output calculation is very helpful - I'll check that.
- Steam is a non-issue as we have hot water.
- I'm aware of the PVC exhaust/intake issues. A quick survey of the back wall of the house indicates we're close enough to the units, we would clear the windows/doors requirements, etc. I haven't looked at it from 3-boiler set up, only 1.
- Unfortunately, drilling is not an option. I think the subway folks would take issue.
- I have contemplated the rent vs. fuel cost issue, and it's not quite the even trade-off you think might think. Since the fuel costs are split between 3 apartments, each would see a modest increase, and we'd still be mostly competitive. In the year we did the conversion, we would either freeze the rent, or lower it slightly. Second, it actually helps keep the rent competitive. As fuel costs go up, if I continue to pay for fuel, the rent goes up the amount of inflation, plus the amount of the fuel increases. If the tenants pay the fuel, the rent only goes up by inflation (cost of living). Yes, the tenant ends up paying more, but they don't really spend much time contemplating that when shopping, in my experience. So an apartment that's $2400 + Util seems to work better than an apartment that's $2600 incl heat & hot water. And I believe that fuel will continue to outpace normal inflation.

- As a landlord, I am interested in making as many of my costs as "fixed" as possible. Right now, the house has approx neutral cash flow, and my hope is over time, it will become positive. I'm convinced that even if I take a small hit in rent for a year or two, it will be much better than banking on fuel costs every year for the next thirty years. As it is now, I can only recoup that money after a 1 yr lag.

- The other suggestions are great - insulation etc will be done regardless of the boiler outcome. We're also looking at things like thermostatic radiator valves for the upper floor, a flue damper and other possible improvements.

Any other thoughts would be welcome.
Dan B

10-23-2008, 01:27 PM
I would seriously consider breaking the three units into three (or four) zones and then installing BTU meters to be used in billing for heat. This way a single boiler (or two smaller boilers) could be used to provide all the heat and domestic hot water. Using two mod/con boilers would be the most efficient and would provide a degree of redundancy if one boiler were to fail.

The BTU meters would have to be acceptable to the local housing authority for use in billing tenants for heat and there would have to be provisions in the lease of the apartment that allowed for periodic revue and rescaling of the cost factor for purchased fuel costs.

10-23-2008, 01:31 PM
You can buy BTU meters that measure the flow and time the heat is used by each apartment. They are simple to install and fairly easy to read though you do need to read them monthly and do the calculations. They are also fairly inexpensive. If you go the boiler route I would stay clear of mod con's especially if the tenant's are paying the fuel bill. Mod con's will cost a lot more and you as the landloard won't see any benefit. My choice would probably be Weil McLain CGM series boilers. Reasonably priced and pretty efficient.

10-23-2008, 03:01 PM
One apartment I lived in in Germany had a device on each radiator. About once a month, they came and read the little gauge and used that to base the cost of heat. Never looked for one here. It's been nearly 30-years, there may be a better way to do it now.

10-23-2008, 05:38 PM
There are any number of companies that make these meters. Typically they mount in a tee inserted in the feed pipes and run by magnetic induction. They are pretty much bullet proof and pretty inexpensive. I've been using them in my own rentals for years.

10-24-2008, 11:52 AM
Thanks for the info on BTU meters - I didn't know about them, and it seems like a potential solution. I'll check into that further.

Anyone have thoughts about the value of an automatic flue damper, retrofit to my old boiler? I know I'd need some new control unit(s), a second gas valve, etc. I see them discussed in many "conservation" articles, and wondered if they have much effect. My boiler exhausts into a 40+ ft brick chimney, which is fully enclosed until the last 3 feet, and has a cap.