Help with Charlotte NC rental HVAC issue

9 Replies

Hi All

I recently acquired a rental property in Charlotte NC - Condo. The tenant reported A/C not working so I called my Home Warranty Company and they diagnosed it as a bad compressor. They fixed this after the 60 dollar service fee and 200 dollar part disposal fee. The system was still not working so they came back out and stated it was a reversing valve leaking which they do not cover. Got a second opinion and contractor stated he would have never replaced a compressor on a unit that was 17 + years old and there were many other issues with the unit. He would recommend a new unit which would run 9,000 - 15,000. Tenant is very reasonable and has accepted fans FOR now. I was thinking about getting a mobile unit from Walmart to give me some more time to think about next steps. The contractor stated that A/C is not mandatory in NC however I rather keep this tenant happy then cause an issue by not coming up with a solution. I am about to cancel my Home Warranty (Choice) since is seems the big ticket items are never covered. My investment including closing costs to acquire this property was 18k (2018). It is currently cash flowing 190 per month so the thought of having to shell out another 9-15k on this is daunting.

My questions are:

1. What would you do at this point?

2. Is there a downside to holding off on the HVAC unit knowing it will need to be replaced in the future eventually

3. If replacing HVAC is the best option does anyone know contractors that can do this at a fair price? The condo is 3 bed 2 ba - 1,122 sq feet.

Thank you in advance for your feedback!

Originally posted by @Justen Johnson :

Hi All

I recently acquired a rental property in Charlotte NC - Condo. The tenant reported A/C not working so I called my Home Warranty Company and they diagnosed it as a bad compressor. They fixed this after the 60 dollar service fee and 200 dollar part disposal fee. The system was still not working so they came back out and stated it was a reversing valve leaking which they do not cover. Got a second opinion and contractor stated he would have never replaced a compressor on a unit that was 17 + years old and there were many other issues with the unit. He would recommend a new unit which would run 9,000 - 15,000. Tenant is very reasonable and has accepted fans FOR now. I was thinking about getting a mobile unit from Walmart to give me some more time to think about next steps. The contractor stated that A/C is not mandatory in NC however I rather keep this tenant happy then cause an issue by not coming up with a solution. I am about to cancel my Home Warranty (Choice) since is seems the big ticket items are never covered. My investment including closing costs to acquire this property was 18k (2018). It is currently cash flowing 190 per month so the thought of having to shell out another 9-15k on this is daunting.

My questions are:

1. What would you do at this point?

2. Is there a downside to holding off on the HVAC unit knowing it will need to be replaced in the future eventually

3. If replacing HVAC is the best option does anyone know contractors that can do this at a fair price? The condo is 3 bed 2 ba - 1,122 sq feet.

Thank you in advance for your feedback!

Congratulations on getting into the REI game!

I would not spend a thousand bucks to try to save a 17-year old unit.  It was worth $260 to try, but it's not worth another 6-700.  Too much risk that something else will fail on it sooner rather than later.

 That quote of $9000-$15000 is ridiculous.  Assuming the ductwork is fine and assuming this isn't a 5000 sq ft mansion, you can get a new unit for around $5500 including a new furnace.  If you need only a new AC, it will be cheaper.

Get more quotes.  If you can't find a low quote, I can give you my guy's number.  He works out of the Triangle, but he went to Hickory a couple of months ago to install a new unit for my brother -- same problem as you, he closed and two months later the A/C died.  And my HVAC guy also went to G'boro for me last summer. He'll probably go to Charlotte too.

Don't let the start-up costs get you down.  It happens in this business sometimes.  It's great when nothing unexpected comes up early.  But once you do this, at least you know you won't have to worry about the HVAC for a decade or two.

@Justen Johnson

I agree w @Randy E. At that age not worth repairing. I’ve seen some last up to 20+years but once they reach 15-20 not worth doing any major repairs.

I’ll be happy to share my CLT HVaC tech I highly recommend them I’ve changed 3 HVaC systems w him range from 4K - 5500. Quotes you’ve received seem high

Home warranties are worthless, and never use that contractor again, he is looking to rip you off whenever he gets a chance(or he's a moron that doesn't know pricing).  You should be below 5k to replace the a/c only.   You have to replace the a/c, there is no choice, a tenant may be ok with a window unit as a band-aid short term but any tenant that accepts a window unit for the long term isn't a tenant you want.   And ain't no one dealing with no a/c in august.  Get it done asap or lose a tenant and have the expense and a vacancy. 

and btw, cash flow includes maintenance so it isn't cash flowing $190 if you are taking this repair out of your "cash flow"

@Randy E. Thank you for the insight. I will def shop around for some more quotes. I would also love to use someone that has done great work before so if you wouldn’t mind I would def call you reference as well!

@Justen Johnson home warranties are a waste of money. At this point it sounds like you need a new AC.

I agree with the others, this should be likely 3500-5k depending on brand and what not.

I agree with pretty much what everyone else has said, $9k for an HVAC is a super high end system. No need for that. I wouldn't keep replacing parts UNLESS the home warranty was paying for that. It sounds like they aren't, so bite the bullet and get a new system. I would do it ASAP as the weather here in Charlotte is brutal right now. 

Once you get a new system put in, see if the company that installs will give you an inspection letter that the system is functioning well. That's the loophole that most home warranty companies use. As long as your inspection shows it was functioning with no issues at a certain date and it breaks after that, then they should pay out. There are definitely better warranty companies out there. Just like any insurance/warranty, they're going to try to get out of it, unfortunately. 

Once you get a new system, make sure you have regularly scheduled maintenance. That can extend the life of that investment 10+ years, especially since tenants can't be trusted to change the filters every few months. Just my two cents!