rehab, construction, renovation

4 Replies

Dear BP community,

I've got a question here. When you are doing a full rehab (new floors, kitchen, bathrooms, windows, electric, insulation) in a single-family house, should you try to install new HVAC system, new furnace and a new water-heater, which is a very big expense, or if the old one is working keep the old one, and when it brakes install a new one later on? 

What is the most cost-efficient strategy?

thank you all in advance, 

E. K. 

Are you flipping or holding?

We hold our properties (30 doors now, plus six office suites) and we've found that it is considerably cheaper to replace HVAC equipment proactively rather than waiting for it to fail. 

We learned this lesson on a house that we managed remotely. A boiler was taking $500/yr in maintenance to replace so we waited until the off season and replaced it. It was significantly cheaper than waiting for it to fail and replacing it during the heating season. The same house had a heat pump that failed once a year and cost $1000 to fix each time. We ended up replacing it during the cooling season at a premium. Both new systems cost $0 after the work, and we finally sold the house because we weren't making any money a few years later.

If you are on a boiler, it might be a good idea to remove it and put in central AC. If it is already a central AC, do not replace it until it fails. Even if it is a 70% efficient furnace, depending on your utility rates, you are talking about a relatively small benefit to go to a 90% efficient unit. I did the math once and it would take me approximately 32-years to recoup the cost of replacing it based on smaller utility bills.

thank you all!

I am planning on holding and renting it out.

For now, it is on the boiler 

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.