Investment Property - Air Con Install, Yes or No?

LStyleS on 18/01/2017 - 02:03

I'm planning on leasing my place out in the next month or whenever I get my arse into gear and pack up asap but it's so hot and boring!

It's a townhouse with only an air conditioner in one bedroom upstairs. That's about it and I am wondering if I should install an air con before i get tenants in, as downstairs is unbearable.

Will installing a split system downstairs add value to the property or not really? When I bought the place I didn't think it would be so bad downstairs so I must have stayed in the bedroom whenever it was hot.
Should I just not bother or install it soon? What do you think?

Thanks

Home & Garden

Comments

  • Steptoe on 18/01/2017 - 05:15

    Ceiling Fans are much cheaper.

    You have to maintain whatever is installed at start of lease. Depends on rental demand as to whether it would help get a tenant, or whether it would make it worth more.

    What about installing one and staying. Or better still looking at controlling the heat by shading and/or insulation etc.

    • mskeggs on 18/01/2017 - 08:58
      +2

      Not sure why you got negged.
      Aircon does need to be maintained if it is installed, and this can be a costly headache as tenants lose or damage controls etc. A property manager I spoke to once said a tenant requested a sparky to come repair the aircon - who then charge the $80 call out fee to change the batteries in the remote. (I think this might be apocryphal, but you get the point).

      Ceiling fans are a good option if you think the heat will really put off a prospective tenant. And shade/insulation/improved airflow are also good options.

      • [Deactivated] on 18/01/2017 - 10:42

        You can get a wall panel for the aircon - so no remote for the tennant to lose. This will cost more at installation (in my case around $500) but it also provides addtional functionality - like automatically turning itself off at a certain time.

    • djkelly69 on 18/01/2017 - 10:42

      Not sure about much cheaper - we bought 4 for ~$600, and now looking at $600-$1000 for installation. Could have a smallish RCAC installed for that much, which may be suitable depending on the house (and much better for both winter and summer).

      Maintenance costs are a different story of course.

      OP, IMO a RCAC is more likely to get a tenant to look at/want the property, whereas ceiling fans are nice but not tipping the scales much at all.

  • eatwell365 on 18/01/2017 - 07:05
    +1

    As investment property, ask yourself a question.
    Are you going to get more ROI or rent if you install the air con? If not, I wouldn't. Extra things means extra headache and more to fix. Different if you stay there and will sell in foreseeable future - which means increase in value.

  • StewBalls on 18/01/2017 - 08:08
    +1

    Depends on the property, some places are quite livable without AC, whereas others are so hot & stuffy even after environmental mods that you'll have trouble keeping good tenants. The simple test I always apply is would I be happy with the situation?

    If the downstairs is as untenable as you say, improving your property with a few tax deductible dollars to ensure good long-term tenants might be a good spend.

    With regard to maintenance, it'll be under warranty for a few years if you get a good one professionally installed, so I wouldn't worry too much about that.

  • rambutann on 18/01/2017 - 08:14
    +1

    I had this dilemma recently. Mine was for a one bedroom apartment and I decided against it for the following reasons:
    A) if I could raise the rent by $10 a week as a result of having it then I'd have to go at least 2 years without any issues initially just to break even, any issues that do arise will eat into that profit, yes I understand its a tax deduction but I'm not in a high enough tax bracket for it to be worth it.
    B) its another thing that could require maintainence or replacement. I also contemplated a dishwasher but decided against it for the same kind of reasons.
    C) I did install a basic heater and I will insulate the property. Its only like $200 to insulate.
    D) the property is in Melbourne so its very rare that cooling is required as it is very easy to create a flow of air through the place.

    • PVA on 18/01/2017 - 08:27
      +2

      You aren't taking in that people will pass on your place and rent one that does have air.

      • rambutann on 18/01/2017 - 08:35

        I guess that's another factor, I'm in an area that wouldn't struggle to gain a Tennant due to the absence of an AC. But that does raise the question about quality of tennant.. Maybe I'd end up with a better Tennant if I did have AC. I dunno I guess we'll find out next time its leased. Previous two Tennant's have been fine so yeah..

        • PVA on 18/01/2017 - 13:44
          +1

          And the tenant will stay longer if they are treated nice and happier there.
          It only takes a weeks break between each new tenant to lose out in rent.

    • EightImmortals on 18/01/2017 - 08:53
      +1

      How long is the warranty? If it's over the 2 years you should be down for no maintenance costs.

      • rambutann on 18/01/2017 - 09:01

        I haven't fully explored the warranty side of things to be honest. I know a few people that haven't had the best luck with air conditioners which leads me to assume that they will break down. Yes its just me jumping to conclusions but once again I feel like the less things that can go wrong the better. My apartment doesn't get overly stuffy and hot also. So far this year I could probably identify two 20 minute periods in which I would have used it.

        Also, my ozbargain soul hates the fact that it costs about the same/more to install it as it does to buy it..

    • 3dprintingguy on 19/01/2017 - 01:03

      @rambutann if you dont claim the tax back as an expense you can claim it as part of a deduction against capital gains when you sell the property (assuming you make a profit)

      • xyee on 26/01/2017 - 19:22

        If it will be an investment property, adding the AC might increase the value of the property (equity purposes or selling in the future). Record the expenditure under CGT and it will reduce the the CGT payable later on. Also, minor improvements to the property which could buff up the value can be allocated to CGT which might be better, depending on your tax bracket. Disclaimer: Not a tax practitioner. Just a uni student who did tax law and loved it. 😁

  • PVA on 18/01/2017 - 08:26
    +2

    Yes, do it. You will find that although you won't get a lot more rent , the unit will rent out easier and tenants will stay.
    I have know many friends that have rented over the years and quite a few times they have said there is no air con and either don't sign up or and as soon as the lease is up they move somewhere else.

  • thatonethere on 18/01/2017 - 08:33
    +1

    If the apartment gets "too hot" and you don't have AC then you will be in line for a lot of complaints via the RA that it is unliveable, install AC now, reduce my rent etc. The tenants typically pay for power so you don't have to worry about that.

    • Euphemistic on 18/01/2017 - 08:40
      +2

      "Unliveable" because it doesn't have AC? You are kidding surely. Uncomfortable for sure. Not that long ago AC was a luxury, now it is common but not mandatory.

      • StewBalls on 18/01/2017 - 08:46
        +2

        He never suggested that they were reasonable complaints; but trust me, you do get those ones exactly…

  • Gronk on 18/01/2017 - 08:38
    +1

    Here in Victoria, you're not legally bound to maintain air conditioning should issues arise snce it's not categorized as an essential service in the same way heating, stove / oven and hot water are, I know this because I had ongoing issues with the air conditioning at the last place I rented. As a tenant I'd prefer that there were no air conditioner installed at a property rather than one which doesn't work.

    Have you considered other options, such as black-out blinds, which might prevent the place heating up in the first place?

    • [Deactivated] on 18/01/2017 - 10:45

      Good point - In Sydney I always have my north facing blinds closed when it is hot, with the aircon running as well.

  • dasher86 on 18/01/2017 - 08:40
    +6

    trying to rent out a place now without AC will be hard as the tenants will view it and see that it is hot!
    If you rent it out in winter AC will be an after thought.

  • Foxtail on 18/01/2017 - 08:48
    +1

    Do it install good brand like Fujitsu, it wont add value but will help if you ever sell it, also easier to get tenant.

  • oscargamer on 18/01/2017 - 08:58
    +2

    Group. You are simply wrong.

    If AC is there and working when the tenant moves in , it is required to work for the duration of their stay and the ll is required to pay for it to be fixed of it breaks (unless the tenant breaks it)

    It is not essential, so the time taken to fix it is longer than an essential item, but it still needs to be repaired.

    Sounds like you got screwed.

    • [Deactivated] on 18/01/2017 - 10:47

      This is correct - at least in NSW.

      • Gronk on 18/01/2017 - 11:27

        I'd encourage you to run that past VCAT and you'll find that your assumption is incorrect - at least in VIC.

      • StewBalls on 18/01/2017 - 15:51
        +1

        Whilst it is correct, it is not the answer to the question the OP has asked…

  • Zonty on 18/01/2017 - 09:20

    Also ac what you will install tax deductible if you earn high level income like more ththen$40000 will save you 32.5 % tax on tax return.

    • JimB on 18/01/2017 - 11:26
      +1

      Legally you can't claim the whole cost as an one off expense as you have to depreciate it.

      However, if you're replacing a broken air-cond with a new air cond, it is fully tax deductible in one go 'wink'wink'

      • Euphemistic on 18/01/2017 - 14:56

        Would need to be rented out first wouldn't it?

        • JimB on 18/01/2017 - 15:00

          'available to rent'.

  • JimB on 18/01/2017 - 11:28

    Should have installed air cond ages ago so you could at least use it.

    Me? I'd do it, you'll most likely get better tenants who can pick and choose their places.

    I wouldn't rent a place without air-cond.

    • StyleS on 25/01/2017 - 23:59

      True, I can't believe how I didn't think to get one installed. I guess I just stayed in my bedroom that was the only room with AC each summer since 2013! Lol

      I remember last summer clearly with my poor guests at mine sweating away and talking about getting AC downstairs and where… then things happened and I forgot until recently while moving furniture with my mates on a very hot day with the AC running upstairs and a portable downstairs… definitely could have done with AC downstairs!

      So now I'm more aware of what's needed I agree to get one sooner than later. Thanks everyone

  • MeesusEff on 18/01/2017 - 12:13
    +1

    Yes. Partner previously rented a place with no aircon (he locked in the lease when it was cool in Autumn), house had 0 ventilation and was literally an oven during summer. Not even the ceiling fan helped, couldnt get out of there quick enough…

  • tonyjzx on 18/01/2017 - 12:15
    +1

    depends on what the location slash class slash rental return is…

    eg. I have aircons on some higher end apartments but none of the cheaper end.

    some apartments have a lift and higher strata fees etc.

    some don't

    pay more, get more

  • snook on 18/01/2017 - 14:13
    +1

    You air con in a hot box otherwise you'll just have a steady turnover of renters.

    • StyleS on 26/01/2017 - 00:12

      Good point. I shouldn't leave my place uninhabitable for my future tenants. Even though I was there for 3 years and now I'm moving into my boyfriends place if I get my act together and carry out this idea to have mine ready for lease in the next couple of weeks max then I'll feel a lot better…
      Appreciate everyone's input here.

      Now to pack/sell/donate/dispose of stuff in this 3 br townhouse. Eep

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