Repair or Replace HVAC in Rental Property?

Question

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:

• Do you recommend repair or replacing?
• Are the quotes reasonable?  I'm still shopping around, but any suggestions on ways to get the quotes down more?
• When replacing a unit, how common are "unanticipated" problems that cause the quoted price to increase?
• 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?
• Do you recommend any companies in the Phoenix-area for this job?
• Any other advice or thoughts?  I'm all ears.

Many thanks!

John P. · Answer

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

Linda R Gary · Answer

I think repairing HVAC in rental property would be a good option. You can call professionals for this work. There are many air conditioning repair service Essex county NJ experts who are highly qualified and are well renowned for their work in the field.

Gerald Marshall · Answer

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

Kurt K. · Answer

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.

Jim Adrian · Answer

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

Deanna McCormick · Answer

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

Justin Fox · Answer

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).

Gail K. · Answer

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

Repair or Replace HVAC in Rental Property?

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