Repair or Replace HVAC in Rental Property?

14 Replies

Hey BP. Long time reader, first time poster. Looking for some input on whether I should repair or replace my HVAC system in my rental property.

Background: The property is a 1500 sq ft house in Arizona. Current HVAC system is 31 years old. It's inefficient, and it usually needs repair about three times a year. I've spent about $2,500 in repairs on it over the past five years or so. That said, when it's working, it works fine.

Problem: The compressor overheated and is more or less dead. I either need to replace the compressor or install a new unit.

Solutions: I got a few quotes for repairing and replacing, but I don't know whether they're reasonable or not.

  • Repair: The technician quoted $1,500 to install a new compressor with a one-year parts and labor warranty. The costs breakdown as follows: $600 for an R22 compressor; $500 for 8 lbs of R22 refrigerant; $400 for labor. The company is reputable.
  • Replace: I got two quotes for a new 3.5 ton, 14 SEER split system. One quote is $4,700 for a system made by "Day & Night" (never heard of them) with a 10-year parts/2-year labor warranty. The other quote is $4,500 for a system made by Trane/American Standard with a 10-year parts/1-year labor warranty. Both companies are reputable.

Questions:

  1. Do you recommend repair or replacing?
  2. Are the quotes reasonable? I'm still shopping around, but any suggestions on ways to get the quotes down more?
  3. When replacing a unit, how common are "unanticipated" problems that cause the quoted price to increase?
  4. From a tax perspective, it seems like repair is the better option. I can deduct a repair this year, whereas I'd have to depreciate a replacement over 27.5 years. And because the units I'm looking at are 14 SEER and not the more expensive 15 SEER, I wouldn't get the $300 federal tax credit or the $200 local tax credit. I am missing anything here?
  5. Do you recommend any companies in the Phoenix-area for this job?
  6. Any other advice or thoughts? I'm all ears.

Many thanks!

Hi Aaron, sorry to hear about the amount you spent on that a/c over the 5 year.

I'm a hvac/r contractor here in CA. that's a pretty decent price. assuming that you are getting a whole new unit. and not just a condensing unit that sits outside in the back of the house. is this a package (one that  sits on the top of roof) or a split system. (condensing unit sits on side of house and heater and coil sits in attic or in a closet inside house)

I agree with Martin on the price being a very good one if it is a full system.  
The repair on a single part of the system is over 25% of the cost to replace.  
The tenant in the place will have to call you less, you won't have to worry about it for some time, and if you sell/refinance, a relatively new HVAC system will not be a turn off to a lender/buyer.

Also, make sure to have the filter on your system changed / cleaned once a year.  Dirty filters can kill a system.

As others said thats a decent price for a whole system.  I'm actually heading out to do the same for the same price today.  If its only the outside part of the a/c system it won't be a good match with the old furnace/air handler.  Which will lead to nothing but problems.  I wouldn't put a new compressor in a 31 year old unit.  As in I wouldn't even give you the option but might throw out an unreasonable price if you insisted.  $1500 is reasonable but would be a waste of money. 

Having replaced two in the middle of summer in Georgia this year...I'm going to suggest replacing your 31 year old HVAC.    The prices you've been quoted are quite good; far better than they likely would have been in July.  It's probably a good time of the year now to get this done.

Gail

Replace replace replace

Spending 1500 to repair it only to have it break again before the other warranty would have been up anyway means you would have likely spend the 4500 on repairs and still have an old system.
Replace it and scrap out the old one to recoup a few hundred bucks

Replace. I would go with the one that has the 2 year labor warranty as well.  Same year deductions are great if it's cost effective.  Spending 30% (closer to 80 if you count what you've already spent) of the price to replace simply for a deduction just isn't a good move.  I paid over 5,000 for a new system in a new construction.  So those numbers sound good to me, especially for a replacement in an old home that probably has a PITA low-pitched roof.

I would move away from R22 system anyway.  R410a system will cost you much less to get freon for down the road (parts too probably).

REPLACE, We've installed 2 complete systems in the past 2 years, and your energy bills will go down, not worth putting money in a dead cow, that old system is milking your pocket book dry.

CHECK and see if you qualify for any energy rebates with your energy provider before you choose your system certian systems have different rebate credit amounts,  you could save some bucks doing that.

For the second system we purchased the entire system and had the HVAC guy install and saved about 500 bucks, as he had done the previous system for us. 

Also get the newer programmable thermostat it makes a difference 

Once you hit the 20 - 25 year mark, just replace the unit.  I would also replace the furnace as well.  I would also get the yearly servicing contract.   Here is a link below that you may find helpful.

https://www.furnacecompare.com/ac_ratings.html

Replace it and move on. I can't imagine spending so much time and analysis about such a decision. Just do it! 

Replace. I just replaced a 35 year old boiler in a SFH. The cost was $4300 but I'm thinking I won't have any issues for a while and it will lower the tenants heating bills.

REPLACE!!
The old HVAC systems & R22 are being phased out by law over the next 10 years. All new HVAC systems are more efficient and the coolant/refrigerant used for the new systems is cleaner, more efficient costs about $10 per lb.
R22 refrigerant for older more unreliable HVAC systems like you currently have hiked the prices up to $45 per pound and up, because they companies know that the EPA wants to phase out R22.
You will end up spending more to repair the old one and continue to get slammed on overpriced R22 coolant

Replace and forget about it.  31 years is three times the expected life.  Its a cost of doing business.

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