Is It Worthwhile Making an All-Electric Investment Property?

0FoxGiven on 07/11/2020 - 23:51
Last edited 08/11/2020 - 00:20

Hi brain trust,

I'm planning on building an investment property in Victoria (Geelong area). I built my own home last year and went all electric and I couldn't be happier. Paired with a PV system, I run my reverse cycle ducted system in winters and summers without worrying about crazy bills, love cooking on an induction cooktop and heating water with a heat pump HWS is cheap as chips. This is all well and good for my own home as I am perfectly content not being dependent on gas and I currently don't pay any electricity bills (always in credit overall) and I save on gas supply as well. I personally hate the idea of gas (carbon footprint, health hazard, not as effective/comfort providing as electric options) and I'm glad Victoria is getting the southern hemisphere's biggest battery

But does it make sense to spend the extra money (approx 17k, or 24k if I decide to make the home more efficient with double glazed windows and better insulation) on an investment property to make it all electric? Would tenants be willing to shell out extra in rent to live in such a house? Would they not bother with a house if it does not have gas heating and cooking? If I decide to sell the house in the future, will I be able to cover the extra cost in the sale price? I have tried looking for all electric houses in Melbourne to get an idea on how much they sell for and the kind of rent that can be asked for in comparison to the usual houses in the same area. My googling skills must be lacking as I haven't had any luck with my searches.

Keen to get your thoughts on this.

TLDR: Is it sensible to build an all-electric investment house?

Home & Garden

Comments

  • TheBird on 08/11/2020 - 00:02
    +6

    The minority of tenants care enough to pay extra. Though, you only need one tenant to say yes.

    My suggestion with investment property is to know your target market and build appropriate to their demands. In other words, go talk to a real estate agent in the area you're considering building.

    • 0FoxGiven on 08/11/2020 - 00:04
      +2

      I did this prior to building my own home. I never got a straight answer. A lot of "But why?" "Honestly, I have never sold or seen such a property" … ticked me off in some instances.

      • TheBird on 08/11/2020 - 00:06
        +2

        That's your answer. If they give you a "But why" it'll mean that they've never really been asked for it or no one really cares.

        If it's something they've been asked for again and again, they'll know.

        • Kangal on 08/11/2020 - 12:31
          +3

          Yeah, but your premise is broken.
          You assume real-estate agents would know, would care, or have decency to tell the truth. In my experience, all three of those criteria have been met by these bottom-feeders of society.

  • SF3 on 08/11/2020 - 00:13

    make the home more efficient with double glazed windows and better insulation

    Isn’t that better than gas vs electric? As the house should use less AC in summer and heating in Winter.

    • 0FoxGiven on 08/11/2020 - 00:18

      In my personal experience, it helps as the temperature does not rise and fall too fast but I still need heating in Winter and cooling in Summer (I use the AC if temperatures drop below 14 degrees and above 26 degrees). Honestly I think double glazing isn't worth the higher premium and would instead splurge more on the best possible insulation the next time.

  • avoidfullprice on 08/11/2020 - 00:37
    +2

    When I was renting, I would love to only have one utility account paying one set of supply charge. I would've love more if the house was fitted with instant hot water rather than hot water tank. I like to cook with gas but I could get a Weber and a gas bottle if I really want.

    • 0FoxGiven on 08/11/2020 - 00:44
      +2

      Thanks for your opinion mate. When I was renting, one of the homes had gas ONLY for cooking (electric HWS and just one bludy split ac for the whole house). Felt ripped off paying almost $300/pa just for gas supply!

      • garetz on 08/11/2020 - 04:03

        (approx 17k, or 24k if I decide to make the home more efficient with double glazed windows and better insulation)

        You are happy to pay 17-24k for this, but you feel ripped off paying $300 pa for gas ? This would take 80 years to reach 24k for gas costs.

        Plus the additional you pay will save the tenant money, not you, thats why its not worth doing, as you price yourself out of the rental market by having to increase your rental to recover your investment. Then the tenant gets all the financial benefit, and most tenants don't account for this themselves in the price breakdown.

        • 0FoxGiven on 08/11/2020 - 08:41
          +2
          1. I felt ripped off paying $300 for a facility that I hardly used. My usage charges was around $3 for the month.
          2. That was my experience while renting and it was a shit experience living in that house. So I left the house as soon as the landlord hiked the prices because I didnt find it worth living in that place. Personally I don't want to that kinda landlord.
          3. I can claim depreciation on the additional expenses (some for up to 30 years) so I wouldn't think its entirely not worth doing, especially because my household is on a higher tax slab.
          4. I am hoping tenants would see the advertised benefits of the house and if they do, they would be more educated and sensible than the usual folk. Those are the kind of people I would like to rent out to.
        • avoidfullprice on 08/11/2020 - 13:27
          +1

          Kudos to see a potential landlord adds stuff to improve quality of life for tenants, and not just see people as pure $$. Not like oh your AC is broken during summer? I'll fix it next financial year cuz you know I don't live there, the place is just an IP, and why would I want the tenants to get all the financial benefits. I clearly won the election etc

          Good luck to OP. Hope you get a good tenant and good ROI with your decision.

  • highon2str on 08/11/2020 - 01:17
    +1

    I too am considering installing a PV system on a 400k investment property, wondering if the added expense of a $3k PV system would make sense from a financial viewpoint.

  • AustriaBargain on 08/11/2020 - 06:22
    +1

    All things being equal, I'd rent a place with a gas connection than one what has an electric stove. But I'd rent a place with a FTTH connection over one with a gas connection.

  • Euphemistic on 08/11/2020 - 07:10
    +2

    It depends on the demographic of the area you are building in.

    Personally I don’t care for gas, although a gas heater is nice, we could do without if there was no gas connection.

    Being smart with solar, insulation etc is possibly a good draw card, but you would want to be in a reasonably affluent area. No good trying to get people to pay extra in a low socio-economic area although some of them would appreciate lower energy bills. It probably isn’t a priority for them.

    • star-ggg on 08/11/2020 - 07:25
      +1

      My ideal property would north facing 10kW solar system with reverse cycle AC and induction cooktop. Perfect for WFH. If induction cast iron grills exist I would install an outdoor kitchen for entertaining. If it dosen't or cost is ludicrous then a Weber with gas bottle would suffice.

  • mskeggs on 08/11/2020 - 08:43
    +2

    Is it really necessary to pay $17k to get most of the benefit?
    Electric cooking, hot water and heating is price comparable to gas appliances. Add some solar panels and you are done.
    5kW likely covers daytime use, which are readily available with high quality components under $5k.
    The only thing I would hesitate over, is that you will then be responsible for keeping the solar running, so choose a good inverter.

    • 0FoxGiven on 08/11/2020 - 08:46
      +1

      Most of that cost is for a ducted RCAC :( Reckon 2 or 3 split ACs would be cheaper?

      • mskeggs on 08/11/2020 - 08:58
        +1

        As well as cheaper, 2 split systems have redundancy if one breaks, and you don’t need to fuss around with zones etc to only heat/cool part areas.
        I know plenty of people that never worked out how to use their ducted systems.

  • dirtybigbjelke on 08/11/2020 - 11:30

    If you can find a good tenant I think it would make it more likely for them to become a long term tenant. I rented my share of freezing in Winter and Baking in summer shtboxes and as a landlord it's expensive and painful when people move out. Not sure any rent difference would offset the upfront costs but if you were planning to sell in a certain timeframe? You'd also get the depreciation write off.

    • highon2str on 08/11/2020 - 11:48

      Good point about the tax offset!

  • tebbybabes on 08/11/2020 - 13:35

    I've rented in quite a few places and I can share that half of them were electric only. Like the area wasn't serviced by natural gas. I just thought that that's how it is. It was never an issue for us in terms of deciding whether to rent the place or not. Obviously, everyone's priorities will be different. In our case, it was location, access and suitable and working facilities, eg, parking, then it was on the list. I don't know how it is in your area, but when I was a renter, I'd go to heaps of inspections and apply for every one that was suitable… It's not as if, I could actually pick just the one that was perfect.

    So to answer your question from my viewpoint, the things you mentioned would be "incidentals" that would be far down the list for me in considering a rental. In my case, it would be a location, then number of bedrooms, then pricing in relation to everything else available…. everything else is just "oh that's nice." If I had to pay a premium over comparable properties for that then the savings would have to be made very clear and very compelling, otherwise, the property goes much further down the list.

    Kinda like when you look at a rental listing, stuff like new carpets, built-in robes, induction cooking, AC, Fiber internet, etc. They're just listed as features and usually at the tail end.

    Again, that's just for my thought process.

  • Meho2026 on 08/11/2020 - 16:42

    I like the idea but I wouldnt be prepared to pay more rent for it. What it might do is make your property more appealing than comparable houses and reduce your vacancy rate but I dont think it would command a higher rent.
    If you sold the house a few years down the track, you might not achieve a higher sale price, the system will have technologically aged and depreciated.

  • DoctorCalculon on 08/11/2020 - 19:22

    heating water with a heat pump HWS is cheap as chips

    0FoxGiven, may I ask which brand/model electric heat pump HWS are you using? I am in the research stage of cutting off my gas, and moving over to a fully electric house with solar panels and battery system.

    I am looking at the Rinnai / Hotflo Electric Hot Water Storage 160L model.

    • highon2str on 08/11/2020 - 21:20
      +1

      I'm lookign at getting a Stiebel heat pump HWS to replace my electric boosted solar HWS.

    • 0FoxGiven on 08/11/2020 - 21:33
      +1

      Mine is a Chromagen 170L. Not my preferred brand but I had to go with what my builder could supply.

      • DoctorCalculon on 08/11/2020 - 21:34

        What would be your preferred brand?

        • 0FoxGiven on 08/11/2020 - 21:37

          EvoHeat or Hydrotherm

    • lgacb08 on 08/11/2020 - 22:24

      if you're looking for a name branded, search for sanden, it's probably the lexus of the heat pump HWS but it's not cheap.

      • DoctorCalculon on 08/11/2020 - 22:32

        Yep, agreed. The guys from G-Store suggested Sanden to me last year. Product reviews looked great.
        However, I don't see Sanden models listed any more. Maybe, they are too costly and people aren't buying them.

        How would Sanden (Japanese Tech) compare with EvoHeat, Hydrotherm or Stiebel (German Tech)?

  • lainey13 on 08/11/2020 - 23:06
    +1

    Not all renters want the cheapest nastiest rental they can get. When I was renting I certainly looked at double glazing, insulation, heating/cooling, solar anything, never electric hot plate. But it depends on your target market really and how much extra someone would be willing to pay

  • bobbified on 09/11/2020 - 13:42

    Growing up, I thought an all-electric house was pretty normal. I lived in one for the first 20+ years of my life. I actually thought that part-electric, part-gas was not the norm. I kept hearing about how there are people that prefer to cook with gas rather than electric and vice versa.

    Then I rented for almost 10 years and I can't say that I had a preference of one or the other. I mean, the gas means an extra service charge each month, but it's not something I even took into consideration when deciding to rent a place or not. That extra $30 or $40 when I'm already paying ~$2000/month in rent doesn't even get a second thought.

  • brad1-8tsi on 09/11/2020 - 16:06

    You could go somewhere in the middle. All-electric, solar PV, good insulation, low-e glass and a small water tank for the garden. Advertise it as an enviro-house. A lot of people would love that.

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