Cash On Cash Per Month And A HVAC Upgrade

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Cash On Cash Per Month And A HVAC Upgrade

John Groseu
Member since 2018 · 2 posts · 0 votes

Hi everyone, I'm Dan and I am new to real estate investing.  Weighing if I should upgrade my existing HVAC and rent a 1 bedroom condo that I live in now near NYC or sell.  I'm aiming for a profit of $100 per month.

HVAC isn't broken but it is very old and electric bills are high. Replacement is $7,000 and that plus other CapEx, vacancy, etc., I would be cash flow positive in roughly 2 years (not factoring tax incentives, etc.). Unit is otherwise is in great shape and although I can't get an exact age of the appliances, they're in great shape too. Plus, transit is walking distance.

I'm thinking of just letting the HVAC go until both the heat pump and air handler (circa 1983) need to be replaced and renting the unit as-is.  My major concerns are cash flow and if my tenants will fork over $200+ per month for electric pre-replacement (i.e. high tenant turnover- I figured 30 days out of the year vacancy which I was told was ridiculously high here but, it makes me feel better).

Has anyone had a similar experience to me and your analysis shake out okay in the long run?  Appreciate any help.  And, if anyone needs any help from me, give me a shout.

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  • Alex Furini
    Architect · Cary, NC · Member since 2018 · 96 posts · 63 votes
    7y

    John,

    Regarding if you should rent or sell, I think that really depends on what you want out of the apartment. Instant cash to purchase other investment properties or someone paying off your condo for you with a bit on the top every month? Will the property and rent appreciate in the future allowing you more funds to work with? Would refinancing or a Home Equity Line of Credit provide the same desired outcome while keeping the property? There are a lot of ways to skin the cat, the best outcome for you is knowing all the angles and choosing the most appropriate to YOUR situation.

    Along the same line of thought, For the HVAC unit, Assuming the tenant is paying the utilities. I see keeping the unit if the tenant is paying the utilities and you are renting it out. I see replacing the unit if energy conservation is important to you or you want a better functioning unit in your apartment for future use. Electric HVAC is outdated, expensive, and fairly wasteful. There are a lot more efficient cheaper operating systems on the market to choose from. As above it depends what you want out of the apartment. 

    Best of Luck.

    Alex

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