Air Conditioning options

[Cara Suksi]

Hello all-

We are about to begin a rehab project on a single family home which currently lacks air conditioning. We feel strongly that we should market the house with A/C. The house is an REO that we are going rehab and flip to a retail buyer.

We made our offer without inspection clause in order to be more aggressive and move to the front of the line. We still get inspections in order to help plan our rehabs.

We found out in the inspection, we were told that the furnace, while dated, has many years left on it, but is not strong enough to handle air conditioning. So in order to have central air, we have to remove the furnace and install a new one plus of course the A/C unit.

Our question is: does it make more sense to do this (house is 1250 sft bungalow, we are guessing we can get it done for about $6,000), or to leave the furnace in place and spend about $1,000 and get window a/c units for every room in the house? It would be nice to market the home with new furnace and A/C, but we're concerned that we won't get it back in the appraisal.

We picked up the house for $38,000. As it stands, we are looking at approximately a $17,000 rehab; after insurance, taxes, etc., we'll have about $58,000 in this house (@$63K with the new furnace and a/c). ARV is $85K to $90K.

Any opinions would be greatly appreciated! :D