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| Heating/cooling system upgrade? |
| Posted by: Steve |
| Date: June 14, 2005 08:45:04 AM |
| I'm trying to decide whether we should replace 20 year old heating/cooling systems in a rental house and am not sure how to analyze the matter. Any tips on how to make the decision?
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| Re: Heating/cooling system upgrade? |
| Posted by: jmm |
| Date: June 14, 2005 09:16:57 PM |
| Whether it is a good idea to install a new heating/cooling system depends on a number of issues including future plans for the property. Major renovation projects are almost never a good idea if you're getting ready to sell the property. While many improvements provide a significant return on investment over a number of years, the return on investment for various renovation projects due to immediate increased value are usually relatively low.
For the rental property, a major improvements may actually return a significant profit over both the short-term and long-term, depending on the project.
First, an improved property should allow higher rents. An improved property should attract a better quality tenant, one who can afford a higher rent, one who is more likely to pay the rent on time, one who better maintains your property, and one who is less likely to do damage or cause other problems. For heating/cooling systems, in many areas of the country a new higher efficiency system can bring savings of more than $100 per month during the peak winter and/or summer months.
For example, a $3,000 improvement that allows a higher rent by $40 per month generates additional income of $2,400 in 5 years. If the return on investment upon sale is 50 percent, the increased sales price was $1,500 and the net cost was only $600, meaning that improvement provided an additional $900 profit over the 5 years.
Also, the expenditure produced additional tax write-off that further increases the real net profit, the degree depending on tax bracket.
Furthermore, if you are experiencing higher maintenance costs because of the age and condition of the system, the reduced expense resulting from installing a new system will further increase the return on investment as well as reduce the hassle.
Installing a new heating/cooling system typically increases the immediate sale value of a property by 40 to 60 percent of the cost of the system, but the percentage can be significantly higher, perhaps the full cost, if the old system is in bad shape because a knowledgeable buyer will likely discount the offered price by the total cost of replacing the system.
Finally, some electric companies provide incentives for upgrading to more energy-efficient systems, either by providing low interest financing or cash rebates. |
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| Re: Heating/cooling system upgrade? |
| Posted by: Ed |
| Date: June 14, 2005 10:59:45 PM |
| Be sure to get multiple estimates for replacement and make sure they're quoting similarly rated units. If the low bid is installing inferior equipment, you may not be getting the best deal. All heaters and A/C units have ratings. Be sure to compare like units - they can be different brands, but make sure they are of similar rating and quality and check the warranties. |
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| Re: Heating/cooling system upgrade? |
| Posted by: mlr |
| Date: June 15, 2005 07:02:29 PM |
| Stay away from the big name brands that require restrictive provisions in their warranties that concern who can perform the labor. Those contractors are usually rip off artists because they know that they are the only show in town (only authorized repairman). WSe had one of those installed into one of our rentals a few years ago. Ignorantly, we were thrilled to still have coverage on parts when the furnace needed a new ignitor. It is something that my husband installs regularly, but they wouldn't provide the part unless Company X did the labor. Well the part cost us $70 at an internet site, but the repairman wanted $250 to do the repair. That was a no brainer. |
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| Re: Heating/cooling system upgrade? |
| Posted by: Lee |
| Date: October 04, 2005 06:00:27 PM |
| Hey there,
I wanted to know If it's alright for my landlaw to request me to pay for a aircon to be installed in my rented house ?? I'm not sure wat to do can any one help?? |
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| Re: Heating/cooling system upgrade? |
| Posted by: Ed |
| Date: October 04, 2005 10:49:24 PM |
| Lee - I'm not sure I understand the question. Are you the landlord or tenant? If you're the landlord and your tenant is asking for A/C installation and it doesn't already have A/C (broken), I'm not sure what the dillema is? Unless there's an ADA requirement, I don't see the issue. If you're the tenant, why would your landlord ask you to install A/C in the unit you're renting (tell him/her "no")? |
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