If you’re in the business of flipping houses, you know that the home’s HVAC system matters. Buyers expect the furnace and air conditioning unit to be in working order, and the newer the HVAC system is, the more attractive the property is to buyers.
This is especially true in Pennsylvania. Buyers here demand that the home is prepared for our cold winters, and consequently, new heaters tend to jump out in home listings. Plus, if the investment property’s furnace or A/C unit is more than 10-15 years old, chances are it won’t go unnoticed. The buyer’s inspector will likely find and report a heating/cooling system that’s on it’s last leg, which might just scare off a potential buyer at the last minute.
So how should home flippers approach HVAC improvement? The key is matching affordability with dependability. Here are a few keys to consider:
Should I Repair or Replace the HVAC System?
In some cases, repairing the home’s furnace or A/C might be the most economical option. This is especially true for systems that are relatively new. In general, if the repairs will cost more than one-third of the replacement costs, replacement is the better option. The reason? Costly repairs won’t likely add the same value for buyers as replacing the system.
Considering Heating Upgrades
You have hundreds of options when it comes to purchasing a new furnace or heating system for your investment properties, and it can be hard to choose which one is best for home flipping.
Typically, though, your best bet would be to match the HVAC system to the market. Some upscale markets demand high-efficiency furnaces or state-of-the-art geothermal heat pumps. In others, a standard 85-percent efficient furnace is attractive for buyers.
When shopping for HVAC systems for investment properties, there are a few points to consider including:
- Heating System Types: In most locations, the three most common are forced-air, heat pumps and water boilers. If you’re flipping a home in a more upscale environment, geothermal heat is another option, which is eco-friendly. Common types include:
- Forced-Air Systems: These systems utilize a furnace which produces warm air and then “forces” it through the home’s air ducts. These systems are cost-effective to install, and they’re attractive to potential buyers.
- Heat Pump: Heat pumps gather heat from the surrounding air and use it to generate heat for the home. These types of systems are highly efficient, but since they are less common, they’re not always preferred by buyers. Some buyers will love them, while others may not.
- Boilers: Boiler systems generate hot water, which is then distributed through the home’s radiators or baseboard heaters. These systems can be cost-effective to install.
- Efficiency Rating: Your heating system has an AFUE rating, which is its efficiency rating. Essentially, AFUE is a measure of the amount of energy that’s converted to heat. Typically, older furnaces have AFUE ratings of around 70 percent, meaning 70 percent of the energy is converted to heat and 30 percent is wasted. Today, standard units average about 80 percent, and high-efficiency models can reach 95 percent. A high-efficiency furnace may be attractive in upscale neighborhoods. In others, it may be difficult to recoup costs for a more expensive system.
- Available Rebates: Typically local and federal rebates are available for updating home HVAC systems. The local energy company, for example, may offer rebates to homeowners who upgrade or repair their HVAC systems. This can help you offset some of the costs of installation, but not all types of heaters are qualified for rebate programs.
Ultimately, you’ll want to determine the best value for the heating updates. In some locations, a high-efficiency 95% AFUE furnace might be a selling point with buyers and add more value to the home. In other locations, a more affordable system will do the trick.
Beyond the furnace, there are other HVAC components you will want to consider. For example, a home without central air cooling, might be limited in appeal, depending on the targeted buyer demographic. Today, additional options like smart, programmable thermostats may also be a high-priority need for buyers. A few items to consider include:
- Air Conditioning: Depending on your target market, an A/C installation or upgrade may be a requirement. A/C units may be a big ticket item, especially, if you have to install central air.
- Thermostat: Thermostats are a low-cost replacement item, which makes it a nice item to add to your updated list you will share with buyers. Depending on your target market, a smart, programmable thermostat may be an attractive option.
- Ductwork: Depending on the extent of your renovations, a lot of dust may have been kicked up into the duct system. A proper Duct Cleaning may be needed to remove dirt, and debris that can cause health issues. Additionally, a duct inspection can ensure the ductwork is properly sealed.
Home flippers in PA count on Comfort Pro, Inc. for in-depth expertise and knowledge. If you would like to discuss the best option for your investment property, our customer service representatives can help. Contact us today.