Would you buy a home in TX that does not have central heat&air?

Question

I’ve seen very cheap homes in Lubbock Texas that have window units and wall heaters. That being said I have no idea of how expensive it is to install a central heater or an HVAC or if there are cheaper alternatives that would be good for the property to make it more attractive. I’ve been 86ing properties off my list when I see that they don’t have central heat&air.

But my curiosity has me thinking of if I got the property cheap enough would putting central heat and air in the home fit in a construction budget. 🤷🏼‍♂️

Account Closed · Answer

Somebody bought those houses  previously without central air. There are still buyers, (just not a lot of profit for you). Square footage and location play a huge role. Some houses lend themselves to easily installed duct work and some don't. I'd run the numbers. There must be more than one HVAC co. in Lubbock. I'd get three quotes on a property, pick the best and proceed. You are adding value and that will go to your bottom line.

Joan Brown · Answer

I tend to put central heat and air in all the houses I buy in Lubbock regardless of the area of town. I factor in the cost for the rehab. They are more fuel efficient and more comfortable for the eventual tenant or owner. That means your tenant can afford your rent along with the utility bills and is happier in the home and will stay longer. Interestingly,  have noticed that I have to teach most tenants in lower rent homes how to use the thermostat and what to expect from the unit. That indicates to me that most lower rent tenants are more familiar with the window units and wall heaters. But it can get up to 110 degrees in the summer and down to 10 degrees in the winter. The wall heaters leave a lot of cold areas and the window units leave a lot of hot areas.

@Stephen Robertson is also a thoughtful investor in the area, so there you have an argument each way!

We do have many reputable HVAC installers in the area, so do your due diligence and check with a few for prices. You should expect to pay $5000 to $7000 for a 1000 to 1500 square foot house.

Stephen Robertson · Answer

@Drew Wilson I think this is a great question/discussion thread. One thing to keep in mind is the area in which the house is located. If most of the houses on that block only have window units, consider whether or not this is the norm and therefore acceptable for that particular neighborhood. You'll want to consider the long term cost of window units as well though. They can tend to walk off and do occasionally need replacing; lower concern and cost in a 2/1 than a four bedroom house with two living areas. I'd also look into a mini-split as well. It is much more difficult to recoup the cost of installing central heat/air in a smaller home, especially if the ARV is a low price per sf; this is where you'd definitely want to consider the mini split option (the smallest ones even come as a DIY kit that doesn't require an HVAC technician as they come with a pre-charged line).

On the flip side, this can be a good negotiation point. If the neighborhood has mostly central heat/air homes and has a large enough ARV, you could be getting a deal on something that all the retail buyers (and some other investors) are overlooking as well. One thing I need to get better about is always make an offer if there's a number that will work for you. I've walked into open houses of homes that I knew were unlikely to accept my offer, but I write it down and hand it to the agent anyway. They're required to present any written offer regardless of how they feel about it (though some don't). I've had offers accepted when brokers tell me it's not possible and done things realtors tell me "can't" be done etc... Make your offer, and if it's still on the market 30, 45 or 60 days later, submit your same offer again. Repeat this until it's either sold or off the market. As time goes by, they'll likely increase in motivation. That same offer that keeps coming back will start to look better and better and they could accept or counter. You also have the added advantage of letting the listing agent know that you're serious and they may start looking for deals for you.

Summarized, look for opportunities when you see obstacles; this is a numbers game. Go with the number YOU need to make it work, not the asking price. I've made offers as low as 34% of asking price. It only has to work once to be worth it.

Stephen Robertson · Answer

I should've added: what's your exit strategy? Are you looking for flips or rentals? Just because the property doesn't fit your model, doesn't mean it won't fit someone else's. If you've already done the research and leg work, put the offer in and then wholesale it or get a partner that likes that property.

Tomas Roberto rodriguez · Answer

Depending on size and location we sometimes would rather not have central AC. We run a mostly are buy and hold business and AC’s crap out more than they should.

Also mini split ACs can be a good option on some houses. Depending on house size and attic space.

Mike Reynolds · Answer

I wouldn't stress as much about that as I would the area. I live in a college town also. The main "drag" has one side of the road that is golden but the other side is deadwood. For rent signs everywhere. Even though the college is right across the street. 6 years ago a big investor came in and built 2 units that total 500 or so units and the houses on that side went vacant. They stay vacant too.

After you figure that out, I would do like has been said. Figure out the costs for your particular units and weigh it out over the long haul. Get a reputable AC contractor and you'll get a 10 year warranty on your condenser. I had a condenser go out at 9 years and 6 months and my guy replaced it for free. It makes a difference who you use. Don't short change the beginning to make money now when you can save money later with a good contractor.

Would you buy a home in TX that does not have central heat&air?

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