Forums / Property Investing / Value Adding / Air conditioning worth it?

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  • Profile photo of krgamblingkrgambling
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    @krgambling
    Join Date: 2009
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    Hi all,

    I'm planning on renting out my first investment property in a few months time. It's a small unit in Brisbane without air conditioning. I've been quoted approx $900 to purchase/install a window unit, or $1400 for a split system that will cover the bedroom only. To do the lounge/kitchen it will be the same price again. Does anyone know if air-con will significantly increase the rental prospects for a unit – enough to justify the expense?

    Many thanks,
    Keith.

    Profile photo of WJ HookerWJ Hooker
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    krgambling,
                         I have the same question for a townhouse in Sydney, I am currently investigating this, we have a heat wave at the moment ( but it will be over before the air conditioning is installed ).
                        The tenant actually offered to pay for one and install, remove and make good if leave. 
                    
                        That sounded a good idea, but , its is never made good 100%, so I thought I might make them the offer of increased rent or a 50/50 partnership with A/Con, and asked them to get some quotes.
                         Unfortunately, have not received reply as yet ( probably this week ).

                        But logically, in Brisbane, air conditioning would be a very big draw card to your unit, it would give extra rent, you can claim it back in depreciation ( amount back depending on your tax rate of course).
                        But, in a few years it may need repair or replacement etc which could be a load on finances.

                        I guess its a matter of sitting down and doing the maths, ask the agent how much extra rent you will get with the air conditioning, work out how much tax you will get back over the few years of depreciation, etc.

                        Maybe someone else has already done this??

    Profile photo of maree_bradrossmaree_bradross
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    @maree_bradross
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    No brainer imho – split systems are so cheap now. Our IP has one the property we are renting doesn't :( Fortunately a friend has a portable air conditioner that they have lent us

    Profile photo of newbi2newbi2
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    no brainer – YES

    Profile photo of Kiwi-FullaKiwi-Fulla
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    @kiwi-fulla
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    yep …. it sure makes the unit easier to rent out and you can get a better rent ….. easiest way to confirm this ….
    Call a few rental agencies and see if a 3 bedroom or 2 bedroom house is cheaper without airconditioning.

    Cheers,
    S

    Profile photo of diggerdigzitdiggerdigzit
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    @diggerdigzit
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    yes, it will add ten to fifteen dollars a week more rent in my part of the world and imagine if your townhouse and another with out in the same complex were to be vacant at the same time, most people will take the airconditioned one every time.

    Profile photo of Nicklee88Nicklee88
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    @nicklee88
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    Hi there krgambling

    Honestly airconditioning is a comfort thing, i'm sure from a renters point of view, that a house with airconditioning and a house with out airconditioning, that they would go for the a/c one and would more then happy spend extra $$

    In regards to split systems themselves, i would just pay the price and get one installed and not go halves with the tenant. Split systems only get 4-5years out of them in before they start playing up, pc boards failing, and gas leak after gas leak start forming and at the end of the day there will be a fight over landlord/tenant to who will pay for that bill if it is joint owned. Splits systems aren't worth removing once they have age on them. I do these kind of jobs at work weekly and the price of pumping down the system to take to another property would be close to the price for a fresh install and still have money left over towards a new better split system that will be trouble free for another 4-5years

    Just my 2cents

    Cheers Nick

    Profile photo of gibbo1gibbo1
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    Nowadays many tennants expect air-con.  They have trouble remembering 10 years ago without it.  I believe if you have happy tennants then you are more likely to reduce the amount of vacancy.  Spend the money on a decent unit. 

    Profile photo of Sailesh CSailesh C
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    @sailesh-c
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    Every house we build has air conditioning and dishwasher as standard inclusions. Our research has shown that you will achieve higher rent with these inclusions.

    Profile photo of Results1Results1
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    @results1
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    As i deal only with investment property and not end users I can tell you most definitely 10 – 15 dollars a week extra. Some tenants already in  place may prefer to live as is and not increase rent, but absolutely put in between tenants if that is the case. In a townhouse situation maybe even an upstairs in main bedroom and downstairs in living area would see an increase of possibly 20   plus dollars. Air con is so cheap these days, your $1400 seems a bit over the top so check around, it's a great way to increase returns and help keep happy tenants.

    Profile photo of maree_bradrossmaree_bradross
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    @maree_bradross
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    Nicklee88 you were the voice of doom. I read your comments about 4-5 year life span on split systems and the very next day ours died in the investment property. It is not quite 5 years old

    Profile photo of shubhshubh
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    I would suggest you to go for window AC, because it is cheaper. Your extra investment for split Ac is not going to be covered up with increased rent.  

    Profile photo of Results1Results1
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    @results1
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    shubh wrote:

    I would suggest you to go for window AC, because it is cheaper. Your extra investment for split Ac is not going to be covered up with increased rent.  

    I would disagree there, the window AC is a shoddy looking bit of gear and prone to mishaps.  Air/con will always give you a higher rent and will certainly pay for itself and therefore become a value add on. Like most aspects with investing, takes a bit of time. Some one mentioned the life span as being five years, that maybe right but I have clients who have air cons eight years or so old and they still are kicking on.

    Even at five years with an increase of 15 dollars per week for the aircon, that's an extra $3900 and lets say the cost is $1400 (max) I think that does make it worthwhile, don't you?

    Profile photo of rudra_rrudra_r
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    Hey there,

    We’ve just had a request from our tenant if an aircon can be installed in the master bedroom (there is already one downstairs in the living room). We agreed but as a condition we said the rent would have to rise $10 a week but the tenants came back and have offered to pay for half the aircon if we don’t raise the rent (They just signed a new lease till August 2010 at the current price before the aircon). We’ve had a look at a Samsung reverse cycle inverter split system model for $600 so with the tenant willing to pay $300 we’re only losing $220 of potential rent if we went for that option as opposed to the $10 rent increase.

    Which option would you all go for in this scenario?

    Cheers
    Rudra

    Profile photo of Kiwi-FullaKiwi-Fulla
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    Go back to them with $7/week increase.

    Profile photo of BluegrassBluegrass
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    Hey go the split, we put them in all our investment homes we build and sell and they get 10 – 15 more per week and do not forget that you have increased your depreciation also.
    Kevin

    Profile photo of gatsbygatsby
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    I put one in about a year ago (admittedly along with a couple of other improvements). This was when rents were starting to come on the rise. It added $100 a week more to the rent and effectively made the property cashflow positive (this was in addition to interest rates falling).
    Cheers,
    Gatsby! 

    Profile photo of u36mau36ma
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    I'm considering getting one for my IP – but think I can only get it in the livingroom since the bedroom faces the front of the unit block and I don't think the body corp would allow the extractor to sit on the front of the building. Would tenants still value one in the living only?

    Profile photo of Nigel KibelNigel Kibel
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    I would add the air in. In a city like Brisbane I am unsure why anyone would rent with out one. What you could do is offer aircon in the bedroom but for an extra $10 a week you will put one in the living room as well thus increasing your rent and involving the tenants in the process.

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