I have to say, I dislike the idea of a rental hot water tank. In Ontario rental tanks have become accepted practice - I estimate that more than 95% of homes have one. When you consider the cost of renting (about $18/month) versus the cost of buying (about $850 installed), the tank would be bought and paid for in about 4 years. Hot water tanks can easily last more than 10 years and I have seen them functioning fine at 13+ years old. No doubt this is a very profitable business for the rental companies.
Recently I have seen more and more instances of rental furnace/AC systems. A furnace/AC system is a much larger investment than a hot water tank and I caution homeowners and homebuyers to carefully consider their options before renting one or purchasing a home with a rental system already in place.
Before signing on the dotted line find out the length of the contract, the total cash outlay over the length of the contract, buyout options and transferability of the contract.
While no money down and a low monthly payment might sound enticing when your furnace needs replacing and you are on a tight budget, consider that at $95 per month (an amount I recently saw for a rental furnace/AC system) you would pay for a typical system in about 6 or 7 years. The remainder of your payments are profit for the rental company and most furnaces have a life expectancy of at least 12-15 years and I’ve seen much older models still running strong.
When selling a home a furnace/AC rental contract can be a big deterrent as the majority of home purchasers prefer owning versus renting a furnace. Home sellers should carefully read the contract before listing their home for sale and know the amount of time remaining on the contract, remaining financial obligation, buyout options and other pertinent information, as potential buyers will ask those questions.
Home buyers definitely need to take a rental furnace/AC system into account before making an offer on a house. They should ask for the pertinent rental information before they put in an offer and consider reducing their offer price on the home to reflect the rental furnace. If they do purchase the home they should ensure all contract information is included as an addendum to the purchase agreement.
If you already own a home with either a rental hot water tank or furnace take some time to investigate what your options are. If the equipment is old there may be a low buyout available so you can rid yourself of that annoying monthly payment – but you will have to do the legwork yourself, the rental company definitely won’t volunteer that information!