How do you budget for HVAC and duct maintenance on older rental properties?

Question

Hi everyone, I'm new here and still in learning mode — I own my home in Fort Collins, CO, and I'm researching what it would actually cost to hold a rental property before I jump in. One thing that keeps nagging at me is HVAC. A lot of the older, more affordable rental stock around here has furnaces and ductwork from the 80s or 90s, and I have no frame of reference for what upkeep looks like as a landlord.

For those of you managing older single-family or small multifamily rentals: how do you budget for HVAC and duct maintenance each year? Do you set aside a fixed amount per unit, wait for inspections to flag something, or get on some kind of maintenance schedule with a local contractor? And how do you decide between continuing to repair an aging system versus biting the bullet on a full replacement?

Any real-world numbers or rules of thumb would be really helpful. Thanks for bearing with a newbie.

Robert McGill · Answer

@Mike Carter Just please make sure you keep receipts. Don't be the guy who forgets to write off the repairs. Good luck!

Matthew Morrow · Answer

@Mike Carter on furnaces that old I'd stop budgeting them as maintenance and start budgeting them as replacements. If you can, swap them during a rehab or turnover while the unit's empty instead of waiting for a no-heat call in January. Until then, an annual service plus a monthly capex set-aside per unit beats getting surprised. Ductwork in older houses is hit or miss, so have your HVAC person look at it while they're there. Every property is different, but that's how I'd approach it.

Greg Kasmer · Answer

@Mike Carter - When an HVAC unit is 15+ years old, I typically replace during the renovation. Afterwards, I know I probably have 10 "good years" with low/minimal repairs - mostly just maintenance. I have a reserve account per property that I build first per property and aim for about $5k per property after a few (4-5 years). After I have the base of reserves I begin to think about where to allocate the excess funding. Good Luck!

Aristotle Kumpis · Answer

You could always buy a turnkey property. A lot of companies that I know usually replace the HVAC and roof. But if this is really only a great option if you plan on buying and holding for a number of years. I have home warranties on my properties and that's hit or miss. A few years ago, I had to get a new HVAC and places were quoting me $11K. I found one for around $8K, and the home warranty company covered 50%.

Caleb Brown · Answer

Usually you set aside a fixed % from the rent for cap ex items. If you are buying then I would inspect. With inspections you can have a good idea of life left and what's needed in the next few years. If there is work needed I would set aside extra for when those break. Some ACs and furnaces can last awhile so I would wait to replace until it starts breaking down. Maintenance calls can add up though

Leo Stein · Answer

Welcome, Mike! One thing that's helped me with older rentals is a simple annual HVAC tune-up (filter, coils, drain line, quick duct check) and keeping a log of the unit's age and every repair call. When repair bills on one system start stacking up in a year or two, the log makes the repair-vs-replace decision much easier. I'd also keep a separate reserve per unit rather than folding it into general maintenance, so a failure doesn't surprise your cash flow.

James Jones · Answer

Budget it like a line item, not a surprise. On my $40K Memphis rehab template, HVAC is $5,000 — new system, sized right. I don't nurse 25-year-old units into rentals; I replace during the rehab and the number goes into the deal math before I close.

A dying compressor will kill your first summer. The tenant calls, the house sits hot, and you lose the tenant and the rent. For older properties, plan one full replacement every 12–15 years and reserve roughly $400/year per house, separate from routine maintenance.

Ducts: have them inspected and sealed at rehab. Leaky ducts in a hot attic eat 20–30% of your cooling, and in a rental the tenant pays the electric bill — until they stop paying rent. Cheap to fix during a rehab, expensive to fix around a tenant.

David Rodin · Answer

@James Jones good framework. One thing for @Mike Carter : $400/year takes about 12 years to build up $5,000. On an 80s or 90s furnace you may only have a couple of years left, which is closer to $200/month. Run that before you offer.

Repair vs. replace: multiply the repair bill by the system's age. If it's more than a new system, replace. A $400 repair on a 20-year-old unit is $8,000, so replace.

In Fort Collins I'd worry about the furnace before the AC. Have the inspector check the heat exchanger.

Mike Carter · Answer

Love the 'line item, not a surprise' framing — I landed in the same place as a homeowner, just with smaller numbers. That ~$400/year reserve tracks: my annual service plus filters runs a couple hundred bucks, and banking the rest toward the eventual replacement beats a surprise $5K bill in July.

The duct point really hit home. We had ours inspected when we bought the place and the leakage was bad enough that sealing made a noticeable difference in how even the upstairs cooling felt. Your 'cheap during rehab, expensive around a tenant' rule applies to owner-occupied too — except it's 'cheap on a Saturday you planned for, expensive on a Sunday in August.'

James Jones · Answer

Mike — appreciate that, and your Saturday-versus-Sunday-in-August version is exactly right: plan the work on your schedule, or you'll pay for it on the system's schedule.

How do you budget for HVAC and duct maintenance on older rental properties?

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