Background: I'm ready to list a newly rehabbed 2/1 SFH for rent. I paid cash for the house and rehab. The home was built with a window A/C which is sufficient. My A/C contractor told me "Don't waste your money upgrading to central air. This home and this neighborhood are fine with window units." (Note: I put in a new window unit as part of the rehab). Today, the Appraiser came to do the appraisal so I can do a cash-out refi to get my purchase price back so I can put it into the next house. (And you all know how much I love Appraisers from this post!) The Appraiser said he would only count the square footage in the family/dining area where the window A/C is because there is no A/C vent or central air in the two bedrooms. (You can assume the window unit is fine -- even in the summer. I've felt it and it was cold in the rooms with the old A/C unit on, and I put a stronger unit in).

So here are my choices. What would you do?

Option A: Keep it as a Window Unit. This will mean I can't do a cash-out refi. Upside in this scenario is I remain in-budget and all the rent is cash-flow. Downside is I'll have to wait before I can invest in the next property b/c I won't get my cash-out via the refi. The property would appraise for about $20k less, and below my target. This also changes my COC from 17% to 8.5%

Option B: Spend $5k for central air to ensure the appraisal comes in where I want it to be. (I acknowledge if I'm renting the appraised value is just academic for now). Upside of this scenario is the home will appraise for more, improve (slightly) on renter's satisfaction, and will be in place if I ever decide to sell. Downside is I'll be $5k over budget, and since I can only get my purchase price back from a cash-out refi, it is $5k of cost out of pocket. My COC drops from 17% to 15% (still ok).

Option C: This is a hybrid option: leave the window A/C in place, rent the home, and after it has cash-flowed for 5 months make a capital investment in a central air. Upside of this scenario is I put the home in service and start collecting rent and can choose to pay for central air with the proceeds of the rent rather than my out-of-pocket. I can always request the cash-out refi after that (e.g. May or June). Downside is I won't be able to return the $700 window A/C unit, I'll have to delay having my cash so I might miss out on a deal, and it might be a nuisance to the tenant for a few days when the central air is installed.

Please vote A, B, or C! Bonus points for sharing why you voted the way you did! Thank you!