Cap Ex For a Long Term Rental: Now Or Later?

Question

I currently have a 3 bed 1 bath under property. This is my first deal, and I am unsure of whether or not I should spend on big cap ex items now or later. I will be living in it for a year before I turn it into a rental. The house currently only has forced heating, and I plan on putting AC into the forced air system. I was told that the furnace is older, and will need to be replaced in the future. Is this something I should prioritize now, or wait until it is something I NEED to do. Other items such as windows is something I am wondering about. Should I replace all windows, or how do I base my decisions? Thanks in advance.

Forrest Faulconer · Answer

Hi Alexandro, doing some upgrades to provide efficiency, appeal, and longevity can be a great idea if it is in the initial budget. For future repairs, just make sure you are setting aside sufficient money for when something comes up. I would not simply replace a furnace that is functioning because it has reached the recommended replacement age. Those things can get another 10 years of life sometimes. Just make sure when it does break, you are covered.

Forrest Faulconer

Dave Poeppelmeier · Answer

Hi Alexandro, congratulations! One great thing about that strategy is that you can take your time fixing up the place to rental quality before moving on. The big question is what is the surrounding neighborhood like? You want to bring your house up to the general condition of the neighborhood, maybe a little better but don't go crazy with things like granite countertops, super expensive flooring, etc if you won't get the appropriate rent for it. Regarding mechanicals, if they're working, let them work. Putting AC in a house that doesn't have it can get tricky sometimes, and if the furnace won't handle a new coil for the AC then you might need to get one, but get a few HVAC quotes. But if the hot water tank works, let it work. If the widows work, let them work. A rental need to be functional, not perfect (unless the neighborhood calls for it). Enjoy!