Should I replace the furnace and water heater?

Question

I have my first property BRRRR deal, the furnace is old but in working condition and so is the water heater. The house also doesn't have AC. Would it affect the ARV greatly if I don't change these items?

Pat L. · Answer

The one ancillary I check & replace immediately is the expansion tank for the hot water tank as I often find them shot so I replace them to avoid issues. If one is NOT installed have it done. I often also replace the pressure relief valve if it appears corroded. If it jams open slightly it will waste a LOT of water. I also drain the HW tank & then have it done annually. If it's electric I check & change out the anodes if needed. If it's gas I swap out the usually dirty dusty thermocouples. These are all very cheap PM upgrades in anticipation of very expensive service calls that WILL occur at the worst time possible.

As mentioned by others you're eventually going to replace the HVAC & HW heater so escrow the capital needed. Whenever we replace the HVAC we also throw in central a/c, Over the last 8 years I have also gone with on-demand HW systems & so far no problems.

Good luck...

Dustin Morris · Answer

@Jen Hoang definitely for a BRRRR I would keep them as long as they work. If you were doing like a new roof, windows, or AC that might increase the appraised value but I don’t think water heater or furnace age would impact it much

Mark Frattini · Answer

@Jen Hoang

If they are old but still working I wouldn't replace them.

Jen Hoang · Answer

Thank you for all the responses to my post! You guys have helped me immensely.

Martin Neal · Answer

@Jen Hoang Yes. It’s so much more tedious to do when a tenant is already there. Plus you are inconveniencing the tenant.

E.S. Burrell · Answer

@Jen Hoang

If it’s not broke, don’t fix it. Leave well enough alone and just save and have money on hand for if and when the furnace and water heater do go out.

Dan H. · Answer

I believe furnace, water heater, and windows are unlikely to have replacement value reflected by the appraisal.  However, we typically do replace the windows on our BRRRR if they are old, typically single pane, typically aluminum.  I do not believe we get full replacement value from the appraisal, but in addition to the appraisal you need to realize new windows make the place look nicer and therefore will make the place easier to rent.

We do not replace furnace or hot water heaters that are functioning correctly.

For the windows, it will depend on how old are the old windows (inefficient) and how ugly are the old windows.  If they are single pane, it is my view that they are old enough to warrant being replaced (I would replace them as part of the rehab).

BTW our BRRRRs are in San Diego county.  It is possible that expectations vary by location.

Good luck

Jen Hoang · Answer

Is it true for old windows too?

Andrew Eherts · Answer

@Jen Hoang OOOPS! Then I am going to second Andrew Syrios above on the ARV.

Jen Hoang · Answer

@Andrew Eherts the property is in Indiana.

Should I replace the furnace and water heater?

Most Popular Reply