Small Multifamily with no central AC

Buying & Selling Real Estate
6yFollow

Small Multifamily with no central AC

Dustin Espinoza
Rental Property Investor · Charlotte, NC · Member since 2018 · 15 posts · 3 votes

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

1Reply
20 views

Most Popular Reply

Nasar Elarabi
Flipper/Rehabber · Charlotte, NC · Member since 2010 · 241 posts · 127 votes
6y

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. 

2Reply
See this reply in the discussion

14 Replies

Jump to latestLatest
  • Matthew Irish-JonesBusiness Member
    Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
    6y

    @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. 

    Irish Jones Realty4.947 Reviews
    View Page
    0Reply
  • Dustin Espinoza
    OP
    Rental Property Investor · Charlotte, NC · Member since 2018 · 15 posts · 3 votes
    6y
    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. 

    0Reply
  • Matthew Irish-JonesBusiness Member
    Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
    6y

    @Dustin Espinoza So you would need a lot of duct work run, and maybe even holes cut through floors and such. You should still be able to get a ball park quote from a local HVAC company. You can add that to your CapEx costs and see if the investment still works.

    Irish Jones Realty4.947 Reviews
    View Page
    0Reply
  • Nasar Elarabi
    Flipper/Rehabber · Charlotte, NC · Member since 2010 · 241 posts · 127 votes
    6y

    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. 

    2Reply
  • Dustin Espinoza
    OP
    Rental Property Investor · Charlotte, NC · Member since 2018 · 15 posts · 3 votes
    6y
    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

    0Reply
  • David GlassPro Member
    Rental Property Investor · Davidson, NC · Member since 2014 · 40 posts · 21 votes
    6y

    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.

    0Reply
  • Steve Stuart
    Rental Property Investor · Myrtle Beach, SC · Member since 2018 · 41 posts · 54 votes
    6y

    @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.

    0Reply
  • Bill Goodland
    Rental Property Investor · Allentown PA, United States · Member since 2016 · 567 posts · 442 votes
    6y

    @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

    0Reply
  • Dustin Espinoza
    OP
    Rental Property Investor · Charlotte, NC · Member since 2018 · 15 posts · 3 votes
    6y
    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? 

    0Reply
  • Dustin Espinoza
    OP
    Rental Property Investor · Charlotte, NC · Member since 2018 · 15 posts · 3 votes
    6y
    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.

    0Reply
  • Whitney HuttenPro Member
    Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
    6y

    @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.

    Podcast Guest on Show How to Build Generational Wealth Without Losing it Along the Way
    0Reply
  • Dustin Espinoza
    OP
    Rental Property Investor · Charlotte, NC · Member since 2018 · 15 posts · 3 votes
    6y
    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.

    0Reply
  • David GlassPro Member
    Rental Property Investor · Davidson, NC · Member since 2014 · 40 posts · 21 votes
    6y

    yes per unit 

    0Reply
  • Whitney HuttenPro Member
    Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
    6y

    @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 :)

    Podcast Guest on Show How to Build Generational Wealth Without Losing it Along the Way
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free