Which is the Best Furnace Fuel? We Compare Costs, Efficiency and Eco-Friendliness

by Cristina Miguelez | Updated: May 21, 2020

No house can really be a home if it’s not warm, comfortable and safe for its occupants. This means that every property you rent out needs to have a functioning HVAC system. HVAC, which stands for Heating, Ventilation and Air Conditioning, refers to the different systems it takes to heat and cool a home. Beyond having a functional HVAC system, you need to make sure the furnace fuel used to run it is going to fit in well with the values and budget of your renters.

If you’re planning on upgrading the HVAC system in your rental home, you may want to consider how it will be fueled as well as how that fuel could impact your renters. There are four basic furnace fuels that most HVAC systems use, each one having its own costs, efficiency and eco-friendliness. Use this graphic to determine which one might be the right fit for your property and tenants.

Fuel Types

Depending on where your property is located, you’ll have access to up to four different types of furnace fuel — natural gas, electricity, liquid propane and oil. Natural gas and propane are not commonly available in the same area, and depending on where your rental is, you may find that you only have the option of one or the other.

Each type of fuel will impact a variety of things: the cost of the furnace you purchase, the cost of the fuel your renters pay to heat the property, how efficiently the furnace makes use of that fuel and how much of an impact that fuel has on the environment. When making your selection, you’ll want to pay attention to not just how much the furnace will cost you, but also the type of people you’re renting to and what their concerns may be.

Comparing Your Options

With all of the various considerations you’ll need to make, it may help to start with costs — both yours and the cost to your renters. In the above graphic, you can clearly see how each of the different furnace fuel types measures up against one another for furnace cost, fuel cost, efficiency and eco-friendliness.


Of the four furnace fuel types, gas furnaces have the highest cost for you, but also have the lowest costs in terms of expenditure over the course of a year. If you plan on including heat in the rent or have budget-conscious renters, a gas furnace makes the most sense from a monthly cost standpoint.

On the other hand, an electric furnace will have the lowest cost to you with a mid-range cost to your renters. This can be a good choice if you’re trying to keep costs low across the board. Propane has the second-highest furnace cost and the second-highest cost of fuel, with oil being the most expensive fuel type and the second least expensive furnace model. Keep in mind that most furnace fuel types also fluctuate in cost, while oil is predicted to be consistently high. 


In terms of efficiency, or how well a furnace converts fuel into heat, electricity actually comes out on top. It uses almost 100% of the energy it receives, meaning the ratio level of its heat output compared to the amount of energy it consumes is nearly the same. Liquid propane also does a good job, ranking just below electricity in terms of efficiency, while oil and gas take third and fourth place, respectively.


Efficiency is often conflated with eco-friendliness, but the two terms mean very different things when it comes to furnaces. A furnace can be very efficient, but not necessarily have the smallest environmental impact. If you have renters who are conscious of this and would be more inclined to rent a property with a more eco-friendly furnace, liquid propane ranks the highest, while oil takes last place. 

Making the Right Choice for Your Property

There are several factors that will ultimately go into your decision of which type of HVAC system to install in your rental home and the type of furnace fuel needed to run it. You’ll need to have a good understanding of your target renter demographic so you can best set your budget and market your property. You’ll need to utilize the qualities you think your renters would value most, such as environmental friendliness or a lower monthly heating bill

Categories: Landlords

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