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It's 100 Degrees, Should I Put Central Air in My Rental Unit?

In our area the summers are HOT! So does it make sense to spend money to put in central heat and air conditioning in lower end rental units that do not currently have central air conditioning?

I did the math and came up with this: New central heat and air, where the current is wall heat and no air conditioning priced out at about $7,000.00 including the cost to take out the old heater. This included upgrades to the electrical system. I went to my current tenant and told them if they would pay an extra $100.00 per month, I would install a new air conditioner. In the first year the extra rent would be $1200 so the return on the investment would be 17%. In 5.8 years the air conditioner would be paid off by the tenant!

I liked those numbers, so I put them in all my old rental units for those that would accept the increase or when the property came vacant.

Better than money in the bank.

I also asked each tenant to sign a new one year lease. I have since found that my units are staying rented longer which really helps improve my bottom line. I would suggest putting the entire unit on the roof, mainly for security reasons.

I manage property rentals in the greater Sacramento area, from Lincoln to Elk Grove, and Cameron Park to Galt and Marysville to Davis.

www.HomePointe.com

We have rentals in the following communities:
Rentals in Sacramento, Rentals in Natomas, Rentals in Elk Grove, Rentals in Laguna, Rentals in Galt, Rentals in Franklin, Rentals in West Sacramento, Rentals in Davis, Rentals in Orangevale, Rentals in Citrus Heights, Rentals in Fair Oaks, Rentals in Gold River, Rentals in Carmichael, Rentals in North Highlands, Rentals in Antelope, Rentals in Roseville, Rentals in Rocklin, Rentals in Granite Bay, Rentals in Lincoln, Rentals in Loomis, Rentals in Marysville, Rentals in Plumas Lake, Rentals in Olivehurst, Rentals in Rancho Cordova, Rentals in Rosemont, Rentals in Cameron Park, Rentals in El Dorado Hills, Rentals in Shingle Springs, Rentals in Serrano, Rentals in Rescue, and more.

Posted by Robert Machado, CPM MPM Sacramento Area Property Manager and Property Management on 05/18/2008 04:20 PM

Comments (11)

central heat and air, rent increases, upgrades

Originally posted at: Property Management and Investor Information: It's 100 Degrees, Should I Put Central Air in My Rental Unit?

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11 Comments on It's 100 Degrees, Should I Put Central Air in My Rental Unit?

MAY

2008

Id have killed to have central air in my place when I was renting. 95+ gets old after a month or so straight...lol

100 degrees and no air?!?!?! That sounds like a crime! WOW! Glad the investment is paying off for you. I bet the tenants are relieved too to say the least.

Robert, here in the Greater New Orleans area that is a no brainier. Although rentals with just window unit work, I feel in the long run they may cost more. In the winter months the tenants will use space heaters which can lead to other problems and cost. AC here in my market is my biggest expense. I recommend a PM program every spring with your AC guy. Encourage or do it your self change the AC filters this will lead to longer lasting AC units.

Great way to look at it. I think if it were me, I would gladly pay $100 to have a good night sleep.

When me and my wife first got married we lived in a place that added A/C when they found out my wife was pregnant. We thought these landlords were the best and ended up staying another 5 years where we probably would have moved after 1 if they hadn't done that.

Why not ? But focus on window units, though, if you can install them. They're cheap and if they're stolen you can deal with your insurance company or your tenant.

In Sacramento, you're asking if we need CH&A? It was 109 yesterday inland. Yowza! I have two AC window units in my garage. I put them in vacant homes without AC. Otherwise, those homes would never sell. Because the agents can't stand being in them to show -- not so much that the buyers mind. In fact, in every home I have sold without AC, I offer to sell my units to the new buyers, but they typically respond in the negative. They figure they'll put in AC once it closes. Few get around to it. So I still have my window AC units. :)

Great way to look at the investment and as a previous poster commented I bet it helps your tenant retention. Tenants love it when they have a landlord who makes continuous improvements to their property!

Very Good point with putting ac units on the roof because I have had three listings where people have ripped apart units for copper wiring. Makes complete sense to have ac to minimize turnover.

MAY

2008

Smart post, with very smart posts. In our area, wall unit air conditioners would probably be the most cost effective, since the temperature rarely goes over 95.

All the best!

MAY

2008

That's a great analysis Robert. The math makes it so clear. I wonder if there are any good energy efficient models on the market? I remember being in Sac in the summer when there were 'rolling blackouts'. A house heats up fast! But keeping the air on all day cost a fortune. One of our writers just finished a submission on staying cool in the summer - she found that an electric fan supplementing the air conditioning helps keep the air cool longer and cuts the costs. We'll all be trying that out this summer! Thanks for the article. Kim/AAOA

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