Small Multifamily with no central AC

14 Replies

Hi BP,

While driving for dollars, I came across a small multifamily (possibly a triplex) that I would like to pursue; the only thing I am concerned about is that it does not have central air. All units appear to have an individual AC window units. This property is about 30 min south of Charlotte, NC and if you are not familiar with this area, the summer’s temperatures can get up to 100+ degrees and very humid. AC is a must in this area and majority of rentals have central air. I would like to hear the opinion of other investors that own properties in a similar climate. 

- How have you handled this issue?

- Is having no central air a deal breaker?

- If not, have you had to install central air to keep up with competition?

- What’s the ballpark cost of a central air installation in a small multifamily?


Any suggestions or advise welcomed



@Dustin Espinoza What kind of heating system does it have?  If it has forced air adding central air is not that big of a deal.  You can get a quote on that very easily.  If they are currently occupied units and renters are happy with the window units it also may be a non issue.

I used to rent may years ago the 4th floor of an apartment building . We had a window unit in every room.  IT was a pain but, it didn't keep us from renting the place. 

Originally posted by @Matthew Irish-Jones :

@Dustin Espinoza What kind of heating system does it have?  If it has forced air adding central air is not that big of a deal.  You can get a quote on that very easily.  If they are currently occupied units and renters are happy with the window units it also may be a non issue.

I used to rent may years ago the 4th floor of an apartment building . We had a window unit in every room.  IT was a pain but, it didn't keep us from renting the place. 

Thank you for pointing that out. Unfortunately, all units have electric baseboard heaters. 

 

If the price for the triplex is GOOD then  thats the most important thing.  Yes, you can still rent the unit with window units. you might not get as much as a unit with HVAC but if you charge 50-100 cheaper then you will not have any issue with renting it. So most important thing is to BUY IT RIGHT. if you are adamant about putting a HVAC unit expect to pay between 4500-5500 to have it done RIGHT. I did one on my triplex about 2 years ago. Of course if you get closer to 4500 thats a GOOD price so hop on it. I am also in the same area as you if you need a licensed HVAC guy. S/N if your open to wholesaling the triplex I'm still buying for the right price. 

Originally posted by @Nasar Elarabi :

If the price for the triplex is GOOD then  thats the most important thing.  Yes, you can still rent the unit with window units. you might not get as much as a unit with HVAC but if you charge 50-100 cheaper then you will not have any issue with renting it. So most important thing is to BUY IT RIGHT. if you are adamant about putting a HVAC unit expect to pay between 4500-5500 to have it done RIGHT. I did one on my triplex about 2 years ago. Of course if you get closer to 4500 thats a GOOD price so hop on it. I am also in the same area as you if you need a licensed HVAC guy. S/N if your open to wholesaling the triplex I'm still buying for the right price. 

Agreed. I can build in the cost of the installation in my offer to make the deal work. $4500-$5500 is less than I expected for a central air installation. If you don't mind, could you send me the number of your HVAC contact? I would like to get a ballpark cost from them before pursuing the deal. And I'll keep you in mind if I decide to wholesale the property. Thanks

 

it will certainly effect the rent you can get, having central air is a must to get top dollar for rents and in my opinion the right type of tenant. I own a HVAC company and site unseen we can do a system for about $5k and doing all 3 at once can save a few more dollars. I have done very well in the Charlotte area with buying duplexes that are a little run down and no AC.

@Dustin Espinoza

A lot would depend on what’s common for your area. Out of my 62 units only about 30% have central air- the rest are window or through the wall units. A 32 unit building we close on next week also does not have central air. That’s common for the area so we don’t experience much of a drag on rent pricing.

Originally posted by @David Glass :

it will certainly effect the rent you can get, having central air is a must to get top dollar for rents and in my opinion the right type of tenant. I own a HVAC company and site unseen we can do a system for about $5k and doing all 3 at once can save a few more dollars. I have done very well in the Charlotte area with buying duplexes that are a little run down and no AC.

Yes, my main concern with the central air is that I want to attract the right type of tenants. The area were the property is located is in a B+ area and I want to make sure to find B+ type of tenants so I don’t have issues within the property or even with the neighbors. 

On regards to the system, I’m going to assume is $5k per unit and not for the whole building, correct? 

 

Originally posted by @Bill Goodland :

@Dustin Espinoza ive no issue renting out units without central air. The $400 AC units that vent out the window are actually supposed to be really good

How’s the maintenance for a $400 window unit? I have concerns on reliability and having to repair or replace them often.

 

@Dustin Espinoza I'm glad to see you are thinking about the area and your tenant.  What are your direct competitors doing in that area?  If they all have central AC, I think that is your answer.  If they aren't, then you have to balance out if putting central AC in really makes you that more competitive.  Essentially, I'm saying don't over rehab if the market won't support it.

Originally posted by @Whitney Hutten :

@Dustin Espinoza I'm glad to see you are thinking about the area and your tenant.  What are your direct competitors doing in that area?  If they all have central AC, I think that is your answer.  If they aren't, then you have to balance out if putting central AC in really makes you that more competitive.  Essentially, I'm saying don't over rehab if the market won't support it.

Thank you Whitney, I like to offer a "product" I would buy myself. On regards to the competition, majority of them offer central air so I think central air would be a must and I need to include it in my CapEx as others have suggested.

 

@Dustin Espinoza Got it. You say you want to rehab the unit to a level "you would want to live in it". That's great, but sometimes that can be a rookie mistake. Just take care to understand what your tenant really wants and where your market is at. I would probably put a nicer rehab on a SFR in a B+ area because when I sell I a wider net of buyers. I wouldn't go as upscale on a triplex because I'd only be selling to an investor. Just food for thought that could help you create some velocity with your money :)