Air Conditioning Repairs/Replacement

[Colin Reid]

I have an issue and I'd love to hear your ideas.

I bought a rental back in June. The home inspector warned that I would probably need a new air conditioner in the next few years, so I planned to start saving all my cash flow as soon as I got tenants in. It took a few months to get it rented, but my property manager got a military family to sign a lease before they even arrived in town based on the video tour and pics.

On Sept 10th, the day before they arrived for the walk-through, PM goes to let the cleaning lady in and the HVAC is blowing warm air. He calls me, and we filed a claim under the home warranty. The tenants can't stay there because it's over 80 degrees inside, so I'm pro-rating next month's rent for every day they can't occupy the house. They haven't asked me to pay for their hotel yet, but their "house hunting leave" runs out on Monday by my math, so after that the Air Force stops paying for their hotel.

The warranty company only deals with one contractor in town and those guys dragged their feet for 3 days before sending the bids to the warranty company. The warranty company tried to offer a $500 "buy out." I called and they said that's all they're paying for. That means just to repair this ancient unit is going to cost me $1000 out of pocket. To replace and upgrade, which is the proper solution, would be over $3,000. That's a tough pill to swallow when I've only received a half-month's worth of rent, and I'm only going to receive, at best, 20 days worth next month.

Right now I just want the thing fixed and my tenants in before they decide to find another place. So I'll pay for the quick repair.

I know this problem isn't going to be solved by the bandaid we're putting on it, so I'm looking to get creative for the future.

I have heard on the podcast that some landlords will buy appliances on sale to have on-hand when something breaks. Can that be done with an air conditioner? Is there somewhere I can buy a unit, maybe put it in place myself and just have the HVAC contractors do the installation? Would that be significantly cheaper than just going through the HVAC contractor?

Another idea I had was buying a handful of window units for emergencies like this. If the main AC craps out, I could run them over, hang them in the windows as a stop-gap until the proper HVAC repair can be done. I will lose at least $400 in rent because of this little debacle, which would pay for a few small window units, or one big one that could cool half this house.

Since it sounds like the warranty company will never fully replace this AC unit, would it make more sense just to bite the bullet and pay to replace it?

Thanks in advance!