Would you pass on a 4plex that had window units instead of CH/A

Question

Good morning, all. I ran the numbers on a 4plex locally that just came up for sale yesterday, and it cash flows at the asking price. My number one hiccup is the window units in the apartments. It is one building, 4 units: 2/1 's that rent for $550/ each 100% occupied. Running the numbers, it should cash flow $400/ month allowing for PITI, vacancy, repairs, Property Management.

I heard a podcast recently where one investor would not look at apartments unless they had central heat/ air. What is everyone else's opinion on this variable? thanks for the input.

I heard a podcast recently where one investor would not look at apartments unless they had central heat/ air.  What is everyone else's opinion on this variable? thanks for the input.

Aaron Thivierge · Answer

Thank you all for your input.  I need to look at other apartment buildings in the area at similar rents to see if they have window units or CH/A.  It's good to know it's not a deal breaker, but rather keeping up with the local market price point and associated expectations.  I appreciate all the feedback.

Kelly N. · Answer

We have three houses now, 10 apartments total, no A/C provided.  Some apartments in the area have A/C but not most.  If my tenants want A/C they put in window units, at some point we will be upgrading and installing A/C.

Josh Mitchell · Answer

My units both have window units in them and I have never had any complaints about it.

Nicole A. · Answer

It depends on the neighborhood. Is it typical for the other nearby houses to have window units or central AC?

All of my rentals do not have central AC and the renters have their own window units. This is standard for the area I invest in. I do not provide AC.

Casey Kleinhenz · Answer

I converted a rent house from window units to central air and I regret it. The upgrade was about 6K. Adequate window units were about 1K. Thing is, it was still a dumpy little house in an average neighborhood. I was still going to be on the low end of market.  I may have added $50 to my monthly rent. not a great return.

It was a good reminder for me to appreciate a house for what it is instead of what I think it should be. This house was a great, cash-flowing deal that happened to be on the lower end of market. I didn't need to try to make it something "better".

Kenneth Brown · Answer

Much other info needed, however if you don't like "window shakers" a very viable alternative is called Mini split systems. They do not require duct systems and are very low profile. You need to do a cost vs. rent roll, cost of debt,