Cry Havoc: Repair or Replace HVAC Units On Your California Fix-and-Flip

California is a perfect example of the power of latitude. While there are differences thanks to geographic features like mountains or oceans, the weather tends to be roughly similar running from east to west. Not so from north to south, as anyone who drives from San Diego to the 42nd parallel can tell you. Along with Alaska, Texas, and Illinois, California counts itself among the longest states in the U.S., which means that residential rehab pros have to understand how heating and air conditioning needs change throughout. The decision to repair or replace HVAC units in your fix-and-flip is a costly and important one, and you have to know what the benefits are for the market you are in. Either fixing the HVAC unit or replacing it altogether can be a great use of your hard money residential rehab loan from Socotra, and if done properly, can add a lot of money to the resale value.

When To Repair HVAC Instead Of Replace

There’s no doubt that a full replacement of a heating or air conditioning unit (or both) is an expensive proposition, and the key to a successful fix-and-flip is to ensure a good return on investment. If the amount you sell for doesn’t greatly exceed the amount you spent buying and doing the work, then you just wasted time.

That said, you have to have a functioning heating and AC unit, or both, depending on where in the state you are. Heating is less important in San Diego and Los Angeles, but increasingly so up north. So make sure it is working, but if you find that it’s not, try checking for a few of these common problems you can fix yourself before deciding to replace the unit wholesale.

  • Clogged Filter. This is the easiest, and most often overlooked, fix of them all. For either a heater or AC unit, the filter collects dust, mold, spores, and everything else gunky that could otherwise be pushed into the lungs of the inhabitants. When the filter gets clogged, it inhibits proper air flow. This is a huge waste of energy, but can be solved with a simple clean. If you aren’t getting good air flow and you see your energy bills increasing (i.e., if it seems like your unit is working harder and producing less), those are signs the filter may be clogged. Don’t forget, this isn’t just a matter of money: clogged air filters help allergens and other pathogens get mixed up in the ductwork and spread around the house, impacting air quality and quality of life in general. 
  • Leaking Refrigerant. So what if the air is blowing but it isn’t getting any colder? The culprit here could be a refrigerant leak, which can be very hard to find. When the refrigerant is leaking, there is nothing cool to run the air through, so it just gets pumped out at room temp. This can lead to a series of cascading problems, as the unit works harder to try to match the desired temperature. While finding a small leak can be a challenge, repairing it is fairly easy and shouldn’t cost very much. A freon leak repair kit involves a hose, valve, and sealant, and patches up the hole while routing freon back into the system. Larger holes are easier to find and require soldering. 
  • Problem with Ductwork. In most homes, air is pushed through ducts. If these are damaged, or have holes, they might be leaking air (and again, forcing the units to work harder, a costly problem). Another problem is unbalanced dampers, which control how much heat or air a room gets. Some rooms may get too much for their size, others too little, and and this will mess with the temperature throughout the house. Balancing these can save a lot of money down the road.
  • Broken Thermostat. Remember the part about people overlooking their filters? A broken thermostat—one that can’t read the temperature properly, or adjust correctly—can be the issue, and it is usually the last place you look. This is a very inexpensive repair, and just involves replacing the broken unit, a simple wiring job. An inexpensive thermostat can cost as low as $50, though it also might be a good idea to invest in a smart thermostat. These save money for the buyer, are appealing to a younger, tech-savvy generation, and are pretty cool overall.

When To Replace the HVAC

Of course, there are times when it makes more sense to do a full replacement. This is generally the case when you have older units that are not fuel-efficient. For reasons of both economy and ecology, that is an increasingly undesirable state.

For a heating unit, you may need to replace the furnace or the boiler to make it more efficient. This can cost anywhere from $3000 to $5000 (give or take), but it is generally worth it. It makes the house you are trying to sell considerably more appealing on the market. It is a great advertising point.

The air conditioner is usually more simple. If the home already has central air, you’re probably good. If it doesn’t, but it has forced air heating, it is a fairly simple procedure to attach an air conditioning unit to it. If it doesn’t have either, and you are in an area where air conditioning is a must (in the southern portion of California), then you may need to install a central air system. This job can get complicated, and cost in the thousands, and you may want to hire a subcontractor. Fitting vent hoods, remodeling ductwork, and other unforeseen issues can make HVAC remodeling more difficult than even the most competent contractor thinks.

It’s a wild state. Snow and deserts, farms and cities, daily fog and no precipitation at all. A good residential rehab professional needs to be able to address all climates, and that includes being ready for HVAC repair or replacement. Your hard money loan from Socotra can be used to make your fix-and-flip more fuel-efficient, more energy-friendly, and more exciting for potential buyers. HVAC can make even a cold market pretty hot.

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