Install HVAC in rental and be broke or NO?

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Install HVAC in rental and be broke or NO?

Mike Nicholson
Real Estate Investor · Woodruff, SC · Member since 2016 · 19 posts · 0 votes

Hello!  In need of some advice and I know you guys can help me.  I am a small time landlord in South Carolina, currently only 3 rental homes.  I have an older, 1200 sq ft rental home (1940) I have rehabbed and turned into a rental, own it free and clear.  I currently have 2 window units for A/C and a small wall mount gas heater for this house.  I have rented this home for approx. 2 years and the past tenant says there was no problem cooling the house however when it gets really cold it is hard for the small gas heater to keep up.  I have researched  2 options.  1)Install HVAC, central heat and air unit,  or   2)Install gas furnace that is big enough to heat the home and keep the 2 window units for A/C.   The huge difference is the money involved.  I have received 4 quotes for HVAC system, duct work and all, anywhere from $7.5K to $10K.  Quotes for new heater is around $1,500.  Huge difference.   I have built up around $10,000 in the account that I use to run this rental property out of,  so the money is there.  I just don't want to completely drain this account for this HVAC, 2 years worth of cash flow for this property!   I plan on keeping the property long term and keep renting.  Should I spend the money to install HVAC or install the big gas heater and keep the window units for A/C that work just fine for this house.  Yes, I am leaning towards putting in the gas heater and not the HVAC.  Your thoughts? Any help would be appreciated. 

Thanks,

Mike

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Nicholas Scatton
Lansdale, PA · Member since 2017 · 174 posts · 77 votes
8y
you can get a 2-4 zone mini split system online from $700-2000. could be a self install or a relatively cheap installation.
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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    8y

    @Mike Nicholson

    What is approximate value of house and how much is rent?

    If its a 40k house with $500 or $600 rent I would personally add a new gas heater.

    If it is nicer, in a nicer area then I would opt for the Heat pump if your in the $750 a month or better rent range.

    1Reply
  • Mike Nicholson
    OP
    Real Estate Investor · Woodruff, SC · Member since 2016 · 19 posts · 0 votes
    8y

    Hey John,  apprx value of this house is $40K.  Rents for $550 per month.  This house is not really in a "nicer" neighborhood, on a 4 lane Hwy somewhat out in the country.  You are from the upstate, its in Woodruff, Hwy 101.

    Thanks,

    Mike

    0Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    8y

    Yeah I am familiar with the area. I wouldn't sink a bunch of money into a new HVAC system then.

    2Reply
  • Nicholas Scatton
    Lansdale, PA · Member since 2017 · 174 posts · 77 votes
    8y
    you can get a 2-4 zone mini split system online from $700-2000. could be a self install or a relatively cheap installation.
    5Reply
  • Marco G.
    Investor · Dallas, TX · Member since 2015 · 446 posts · 197 votes
    8y
    Any question that ends with “and be broke” should be easy to answer! Kidding aside, I’d look into a mini split as well, otherwise your furnace idea sounds like the solution. No way spend all that money. Impressive reserves from that house! Good luck.
    1Reply
  • Mike Nicholson
    OP
    Real Estate Investor · Woodruff, SC · Member since 2016 · 19 posts · 0 votes
    8y

    Thanks guys, I have thought about the mini split as well however I have not received a formal quote on one.  I have heard mixed reviews however from what I have been told could save me around $2K from what the HVAC would cost me.  I would not be able to install myself unfortunately.   The house has 2 bedroom, 1 bath, living room, formal dining room, kitchen, and laundry room.  Would a mini split work in this situation?   

    0Reply
  • Geoffrey Schnake
    Property Manager · Saint Petersburg, FL · Member since 2016 · 113 posts · 87 votes
    8y
    you said you got 4 quotes for hvac but those numbers don't sound right. a 3 ton unit will do the job and in my neck of the woods I can get that done for 5 k max. keep getting quotes till you get the right price.
    2Reply
  • Andrew B.
    Rockaway, NJ · Member since 2016 · 2k+ posts · 2k+ votes
    8y

    in addition to everything above, have you considered installing electric baseboard heat? I imagine SC cant get too cold, so it may not end up being an expensive option for the tenant

    0Reply
  • Linda S.
    Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
    8y

    @Mike Nicholson,

    This winter was extreme for everyone. You're SC, even warmer than VA... no question in my mind if I'd do the split-system, just because it will be an improvement and help both the heat and the cool, so it's benefiting the client on both ends.. if you're feeling cheap, you could do the gas, but for the same price, might as well improve their quality of life!

    0Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    8y

    If you have not had a problem renting it then do nothing, it is fine the way it is. The property is not worth spending the money on from your description. With rent at $550 they should be happy with what they have, and again, if you have not had a problem renting it they probably are happy enough.

    Don't waste your money.

    2Reply
  • Troy GandeeBusiness Member
    Real Estate Broker · Charleston, SC · Member since 2013 · 794 posts · 454 votes
    8y

    I would also do as @Nicholas Scatton suggested and look into minisplits. I have them in two rentals and they're great. A lot cheaper to install, as well. 

    1Reply
  • Nicholas Scatton
    Lansdale, PA · Member since 2017 · 174 posts · 77 votes
    8y

    you will need a 4 zone, there $1995 online. I think the website is alpine ac or something. I would guess it should not cost over $1500 to install, 2k at best. This is all electric though, fyi. Heat and ac. Typically maintainence feee.

    0Reply
  • Nicholas Scatton
    Lansdale, PA · Member since 2017 · 174 posts · 77 votes
    8y

    i would still get more quotes on a central system, if price is the same, i would vote for central. If its that big a jump, than split system.

    0Reply
  • Mike Nicholson
    OP
    Real Estate Investor · Woodruff, SC · Member since 2016 · 19 posts · 0 votes
    8y

    Thanks everyone, a lot of good info here. @Andrew B. I have thought about baseboard heat and researched. I have heard they can be very expensive to run and would spike the power bill a good bit. 

    @Geoffrey Schnake yes, it does sound expensive!  And they are quoting a 2 1/2 ton unit. This would be duct work and all. 

    I have yet another quote scheduled for tomorrow for a HVAC quote as well as mini split quote. 

    @Troy Gandee the rental units you have the mini splits in, how many sq feet are they?  I am just worried 4 zones may not do the trick?

    Thanks again everyone!

    0Reply
  • Max T.
    Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    8y

    for a few hundred you could install an electric baseboard heater or two in the coldest rooms. The AC situation sounds fine so I wouldn't mess with that. You will probably need a 220 line for the electric heater(s).

    0Reply
  • Troy GandeeBusiness Member
    Real Estate Broker · Charleston, SC · Member since 2013 · 794 posts · 454 votes
    8y

    @Mike Nicholson those blower heads are supposed to cover a certain amount of square feet per unit. They suggest one in each bedroom and one for each common space. One of my rentals is like 900 sf (2 bed) and I have 3 there. The other is like 1,300 (3 bed and an an office) and I have 5 in it. Both only need one unit for the great rooms.

    0Reply
  • Steven Bontrager
    Millersburg, IN · Member since 2017 · 2 posts · 0 votes
    8y

    For a couple hundred bucks you can get some baseboard heaters and I believe they come in 110 or 220v.I have had houses with only baseboard heat and it was no problem

    0Reply
  • Steven Gesis
    Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 votes
    8y
    Originally posted by @Mike Nicholson:

    Hello!  In need of some advice and I know you guys can help me.  I am a small time landlord in South Carolina, currently only 3 rental homes.  I have an older, 1200 sq ft rental home (1940) I have rehabbed and turned into a rental, own it free and clear.  I currently have 2 window units for A/C and a small wall mount gas heater for this house.  I have rented this home for approx. 2 years and the past tenant says there was no problem cooling the house however when it gets really cold it is hard for the small gas heater to keep up.  I have researched  2 options.  1)Install HVAC, central heat and air unit,  or   2)Install gas furnace that is big enough to heat the home and keep the 2 window units for A/C.   The huge difference is the money involved.  I have received 4 quotes for HVAC system, duct work and all, anywhere from $7.5K to $10K.  Quotes for new heater is around $1,500.  Huge difference.   I have built up around $10,000 in the account that I use to run this rental property out of,  so the money is there.  I just don't want to completely drain this account for this HVAC, 2 years worth of cash flow for this property!   I plan on keeping the property long term and keep renting.  Should I spend the money to install HVAC or install the big gas heater and keep the window units for A/C that work just fine for this house.  Yes, I am leaning towards putting in the gas heater and not the HVAC.  Your thoughts? Any help would be appreciated. 

    Thanks,

    Mike

     Mike have you considered a mini-split - (2) - (3) units daisy chain together  - 

    Do you think you can get a few more dollars per month rent with a new HVAC system? Perhaps secure a more consistent tenant? If yes, maybe you have a financial question, not just a general question.

    0Reply
  • Joni Chin
    Investor · Honolulu, HI · Member since 2017 · 45 posts · 20 votes
    8y
    I would get a some Cadet wall heaters installed. They cost similar to baseboard heaters but I think they will cover a larger area. They have individual temp control/thermostat too. We have those in each room in our rental property in Oregon, they keep the house warm enough. If you google the website you should be able to determine the right size.
    0Reply
  • Matt T.
    Denton, TX · Member since 2018 · 30 posts · 15 votes
    8y

    Keep it cheap. I wouldn't do anything that will take 2-3 years to pay off. This isn't the Taj Mahal...

    0Reply
  • Daniel Kim
    Carmel, IN · Member since 2018 · 6 posts · 0 votes
    8y

    You may want to make sure if your electric panel and electric lines have been updated. Split heaters, electric heaters, wall heaters sound great, but I am not sure how safe they are. Also you may want to make sure what your insurance company would say about that.

    I own several houses in Indianapolis in that size of yours and 60,000BTU should be fine with 3 ton A/C (or just use window A/C). If the house is in good shape, you may want to consider finding a private installer.

    I always ask to a maintenance guy in nearby buildings or apartments if he could do the installation as a side job. Last year, a new 60,000 BTU Goodman was only about $370. The guy installed this new furnace and total price was $900 including the labor. I don't know how much it would cost more for duck work, but I am sure you can find someone who is willing to do it cheap for extra money.

    0Reply
  • Billy Smith
    Shawnee Mission, KS · Member since 2016 · 716 posts · 313 votes
    8y

    Main point is the brand you install Trane, Lennox are overpriced, Goodman if installed correctly will last just as long.

    Heat pumps too far north really is not a good fit, best fit for mild winters.

    No need for the top of the line Goodman in a small rental get the right model.

    0Reply
  • John Whittle
    Vendor · Cincinnati, OH · Member since 2014 · 144 posts · 58 votes
    8y
    Originally posted by @Daniel Kim:

    You may want to make sure if your electric panel and electric lines have been updated. Split heaters, electric heaters, wall heaters sound great, but I am not sure how safe they are. Also you may want to make sure what your insurance company would say about that.

    I own several houses in Indianapolis in that size of yours and 60,000BTU should be fine with 3 ton A/C (or just use window A/C). If the house is in good shape, you may want to consider finding a private installer.

    I always ask to a maintenance guy in nearby buildings or apartments if he could do the installation as a side job. Last year, a new 60,000 BTU Goodman was only about $370. The guy installed this new furnace and total price was $900 including the labor. I don't know how much it would cost more for duck work, but I am sure you can find someone who is willing to do it cheap for extra money.

    Your worried about properly installed electric heaters but proceed to recommend finding an uninsured unlicensed cheap hack to install an unpermitted furnace. I don't think you understand safety or liability.

    0Reply
  • Jennifer T.Pro Member
    Investor · New Orleans, LA · Member since 2014 · 1k+ posts · 944 votes
    8y

    I am right up your alley with this question.  I live and my properties are in NOLA, where window units are fairly common.  I LOVE window units compared to an HVAC system.  My houses that came with an HVAC have caused me nothing but grief and expense.

    I use window units that have both air and heat.  In my properties, I have one for each bedroom and one for the living room.  The smaller bedroom units heat/cool about 550 sq. ft. and are about $400.  The larger ones I need for the living room heat/cool (I think) 700-750 sq. ft. and are $600.  A caveat for the larger ones is they need a 220V outlet.  Usually not a big deal to have an electrician install one for fairly cheap, but I did run into an issue at one of my properties where it was not possible without significant expense.  Luckily for that one, the HVAC cooling had gone totally kaput, but the HVAC heat is still working.  Crossing my fingers it stays that way! 

    0Reply
  • Shawn Q.
    Rental Property Investor · Champaign, IL · Member since 2015 · 146 posts · 80 votes
    8y

    I, too, would go with baseboard and leave the AC the way it is. Otherwise you're spending money with no return (because you can't increase rents on the basis of the improvement). 

    Super impressed with the cash reserve here as well!

    0Reply
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