When to replace appliances: Proactive or reactive?

6 Replies

Whats your position? Replace things before they break (proactive) or don't fix what's not broken (reactive)? Also, when do you know if something is nearing end of life? 

What's your average life span for the following:

- AC and air handler/furnace (replace both at the same time?)

- Water heater

- Roof

- Fridge

- other things?

I have some pretty old hvac and water heater in one of my properties that are original from when it was built in 1999. Things work but wondering whether I should be proactive or just wait until it fails. 

Usually our rule of thumb is if the cost of repair is half of the cost to replace it. is usually time to go ahead and replace.

With water heaters we go more by age, it is much cheaper to be proactive on replacing water heater than waiting for the water heater to flood the property.  If the water heater is over 14 years old we usually go ahead and replace it.

If it was me honestly I was thinking if it would be cheaper in the long run to replace the hvac with just window units or in wall units that can be controlled via remote. I am sure the manufacturer has data on how many "hours" the units can run depending on model. It might be a bit of a challenge getting to them but I feel like it would be cheaper for you and the tenant since they are paying the bills (I assume). Just a thought.

Back to your question though for the basic appliances like ovens stoves and microwaves it really pretty much depends on your tenants and how much money you have to play with.

Really old appliances are cheap but at the same time their energy consumption is HUGE. It's like comparing a modern 13 watt light bulb against the 100 watt light bulbs from ten years ago.  Huge difference in energy usage but same amount of light. 

As an example: The newer ones cost more but use less energy and last a lot longer which is two pluses versus the cheaper cost for the old 100 watt light bulbs which is just one plus. 

This is beneficial when you are dealing with crappy tenants that like to break stuff. If you have some of those by all means get the cheap stuff because it will keep breaking under their usage. 

The most important thing about appliances/equipment is how you use them. 

From owning a lawn care business I can tell you if you get the cheap 100 dollar equipment vs the 500 dollar equipment and take care of it like the 500 dollar equipment. It performs and runs just as well. (Just make sure the technical specs are the same too)

Example:

200 dollar ryobi backpack blower 510 cfm 185 mph

EVERYONE hates ryobi because it is chinese but I realized early on in the field that if you maintain your equipment and baby it like the expensive Echo's and stihls it will last just the same. The reason these usually don't last very long is because of poor care on the owner's part. 

I got a beat up one that could be reconditioned for 100 dollars plus 13 dollars for the part plus 7 dollars tax. 

$120

vs

299 echo backpack blower 195 mph at 465 cfm (closest i could find to it without rearranging the engine) 

at a bargain this blower is available for about $250. BUT most likely the reason for a bargain on a brand like this is because of overuse. There is a limit to how many cycles an engine can do and usually at this point the engines are dying so it might be worth originally acquiring it at such a nice price but in the long run it will hurt you.

I highly advise you to learn learn learn and learn, not just about real estate. About everything. Law, Lawns, curb appeal, ordinances, appliances, maintainence, even hairstyles help in real estate. It really does make my life easier knowing a lot of things (and cheaper too).

As my teacher used to say "the more you know the faster you can go"

again back to your question. 

Me, if i know the tenants are good and I can estimate the usage of the appliances I would buy efficient appliances and then sell them at about 83% of their usage cycle and get new stuff. 

to add to that, ask around HVAC repair companies and appliance repairmen how often they replace whatever your model of HVAC and appliance is. They are more likely to have it and more likely to know what problems are common. 

I would agree with @Account Closed .  Water heater -- proactive.  I tend to be reactive with things that won't cause the property damage.  Water heaters can leak.  With your AC units - are they serviced annually?  If they are the technician that services them can give you some insights as to how they are holding up.  

Other things like kitchen appliances, I like the 50% repair rule mixed with considering how old things are.  In my own home - when I purchased it it came with 12 year old refrigerator that had a water dispenser.  I repaired the refrigerator after it leaked and damaged the floor.  The lesson for me there was, stay away from water dispensers on refrigerators.

Roofs are dependent on many things from my experience.  In a triplex I own and manage with others, we will be as reactive as possible because the roof has three layers of shingles on it.  You cannot have more than that, so the next time it will need to be repaired we will have to decide on what type of roof we want to put on.  Different roofing materials - like HVAC units in some cases can have a different life expectancy.  

I hope that helps.

Medium erm logoMichael Roy MBA, EastRoy Management, LLC

Hi Petra,

I think it depends on a few factors. What are you looking to do with the property that has the appliances? If you are looking to sell it sometimes people already have appliances so you may be wasting money. Usually people who rent don’t have those items, but if they do then again you could be wasting money. Let’s say you are looking to rent and the tenants don’t have the appliances, then again it will depend on the neighborhood. If it’s a nice neighborhood above median prices then maybe upgrade appliances, but if it’s a low income neighborhood I would wait until the appliances go bad and I wouldn’t get “new” appliances I would get them from Craigslist or discount center. I one time bought a complete set of appliances (fridge, washer/dryer, dish washer, microwave) from a maintenance man at a large apartment complex for $500. Most recently I got like new washer/dryer for $230 and Fridge with ice maker for $150 on craigslist and those both included delivery and install. All that being said it depends on the situation, but I personally wait and if anyone says anything then I would get it or if it breaks then get it. I also have a home warranty on all the houses and the tenant is responsible to call them and pay the first $60 to see if they can fix it first.

In regards to your question about roof, A/C, and Water Heater…same thing. Those are all covered in my home warranty and I pass that cost on to the renter.

Roof’s usually it depends on materials, but on average they last in AZ about 15-20 years

A/C’s in Arizona usually last 10-15 years

Water heater in AZ about 10 years

I know people who have had A/C’s break in 6 months and others who have had them last 30 plus years. So these are all just estimates.

Roofs and A/C’s are expensive to replace around $6k each is what I usually budget.

-John

We have found that appliances and bathroom items (fixtures, toilets) don't last nearly as long in rentals as they do in the properties we live in.  Part of that is because of the low income clientele, but even the previous home owners seems to be harder on things.  We wait until things fail and then get right on repairing or replacing when the tenant mentions it.  We also get used appliances from a used appliance store that takes care of delivery, installation, repairs, and knows us by name.  That would depend on your market and tenant expectations.