First Flip! Should I replace the furnace?
Hi Experts! I am new to posting but have been reading and learning from all of you for over a year. I recently put my first investment under contract- a HUD home that is in a great part of my city near colleges and with a quaint "vibe", and its a great house too- 2 story Dutch Colonial with 3 Bedrooms, a framed in extra room in the very clean basement, 1 full bath, 1 half bath and a toilet plumbed in the basement as well. It has a small backyard, detached garage with opener, and a nice front porch. I've done my research and run the numbers, and my goal is to simply break even- this is my "learning house". My numbers and comps say I can probably make 10k-15k, and I am being very liberal with my budget because all the experts say "expect to be over budget." :-)
Here is my question- one of the “big ticket” items in this house is the furnace. It is operational, (and there is a new A/C unit and ducting), but it needs to be replaced per the inspector because of its age and the fact that is a “convection” style furnace. I budgeted $5000.00 for this -having just replaced my own home furnace at a cost of $3700 for a larger home with higher quality furnace, I figured this number was safe. But now I wonder- would this be a deal breaker for a potential buyer, since it’s functional? I think I would certainly replace it if I was to rent the house (for safety reasons, primarily). But, if I am selling it, wouldn’t it be smarter to wait and see- if I got a higher price/full price offer, and buyers said "contingent on replacing furnace", I wouldn’t really be worse off since I budgeted for it. And if they don’t, it’s an additional 3500-5k in my pocket. I also recognize that “new furnace” on the listing sounds good, especially to buyers in this price range that might not have a lot of disposable income each month. But, I also will get to put “new flooring/newer A/C/newer roof/new kitchen” etc. on the listing anyway.
Please let me know your thoughts and thanks a bunch!