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.

Matthew Tregoning · Answer

For the maintenance-plan part, ask exactly what the local contractor includes: scheduled visits, after-hours charges and what “priority service” actually means when everyone is calling during a cold snap. Managing remotely, I want that understood before there’s a problem. Also decide who books the visits and keeps the service records. Paying for a plan and having the maintenance completed are two separate steps.

Dan Nelson · Answer

@Mike Carter This is a great thing to figure out before you buy.

Here's how I budget it on my own rentals. Every month I set aside two buckets from the rent. About 3% goes to repairs, small stuff like a service call. About 5% goes to the big items that wear out on a schedule: the furnace, the roof, the water heater. So a new furnace is planned for, not a surprise.

After the inspection have an HVAC professional look at it. Every furnance and boiler gets maintenance. That alone will keep it running longer. If it is someone you really trust you can ask how much life you have left and that will help budgeting as you plan for the future.

On repair or replace, I look at the age and the repair bill together. An old unit with a big repair bill usually gets replaced. A newer one with a small fix gets repaired.

Randy Schell · Answer

Researching before you jump in is smart, and I wish more people did it. After 20+ years of inspections I have seen how much a simple yearly tune up helps older systems last longer.

Randy, Bunklow

Jon Marquez · Answer

Mike, one thing I'd separate in your Fort Collins rental analysis is routine HVAC upkeep from a major replacement that could hit right after closing. I'd have a local HVAC contractor assess an older system and estimate replacement costs, then test the first year's cash flow against both that expense and a month of vacancy. That doesn't automatically make an older property a bad investment, but it could change what you'd offer and how much cash you'd keep afterward. Are you already considering a specific Fort Collins property, or building your due-diligence checklist first? I’m a Denver area Realtor

Ashish Acharya · Answer

Mike, HVAC is definitely one of the costs I'd build into the underwriting before buying an older rental. I'd rather have a realistic replacement reserve than assume the system will keep going because it worked last year.

One thing I'd add from the tax side is to keep a clear distinction between routine repairs/maintenance and major replacements. A repair may generally be deductible when incurred, while a full HVAC replacement is typically treated as a capital improvement and depreciated rather than simply deducted immediately.

I'd keep the invoices and project records by property so you know exactly what was repaired, replaced, or improved. That makes both the operating budget and the tax reporting much cleaner.

For an older property, I'd also get an HVAC contractor to give you the expected remaining life and replacement cost before you finalize your underwriting. I'd rather build that expense into the numbers upfront than let a major replacement surprise the investment later. Good question to be asking before you buy.

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

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

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