Should we raise the rent if we add in AC?

[Steele Evans]

Hello everyone,

My wife and i own a townhouse that we are currently renting out to a wonderful family. It does not currently have ac, but we were thinking of adding it in at the end of the lease. Would it be acceptable to raise the rent from $1600 to $1700 a month after we install AC?

Thanks.

[Bradley Padula]

Hey @Steele Evans, It depends. You should look at comparable rentals in your area and see what they're renting for with and without central A/C and that should help you get a sense.

Also you should calculate how long it will take for you to get a return on your investment and if you want to wait that long to be able to recoup your initial investment. Say it costs $5,000 and you get the extra $100 per month, the payback period is 4 years. Say it costs the $5000 and you get no increase in rent, then what? Plus there is another item that will wear out over time and need to be serviced. However, it could increase your property value by adding it but you would have to check comps in your area. Pro's and con's