Table of Contents
There are few things more comforting than curling up in front of a fireplace with a cup of tea and a good book. If you’re an investor with rental properties, however, the thought of an active fire inside your hard-earned investment might fill your heart with fear. Many prospective real estate investors face a tough choice: What to do with the fireplaces in rental properties.
On one hand, fireplaces in rental properties could elevate the value of your rental property to prospective residents. Fireplaces exude charm and coziness. The presence of a functional fireplace could allow you to boost the amount of rental income you earn from the unit.
Conversely, fireplaces represent a significant liability, and they pose several maintenance needs. Any additional income you earn from the fireplace could be eaten up by inflated insurance premiums. Fireplaces also need regular chimney cleaning and have other expenses associated with them.
But first if you are wondering how mortgage lenders value fireplaces in rental properties it may be worth sitting down with a mortgage broker to discuss how different lenders approach them. After all, some lenders may love fireplaces in rental properties because they offer a rustic piece of charm to the home that may increase it’s value in their eyes.
On the other hand, some lenders may see fireplaces in rental properties as nothing more than a hazard waiting to burn the property down.
To get the run down on how fireplaces in rental properties may impact your mortgage, click the link below for a free strategy call with our team at LendCity today.
Focus on the benefits of fireplaces in rental properties
Many property investors respond to the presence of a fireplace in their property with a simple solution: bricking up the fireplace and ignoring it. While this may be the safest solution, it’s worth considering the benefits of maintaining fireplaces in rental properties instead.
Wood-burning fireplaces are romantic, and many people are willing to pay a premium to live in a property with a functioning one. Depending on the market that your investment property is in, you may be able to justify the elevated risk and insurance premiums with the additional income that your fireplace will bring in.
Mind the risks of a fireplace
While fireplaces do carry benefits, it’s also important to recognize the risks they pose to your property and your tenants. There are more than a few reasons you may want to consider removing the fireplace from your investment property, including the following:
They attract pests
Traditional wood-burning fireplaces provide pests with an easy point of entry into your rental units. This can complicate your existing pest control measures. Fireplaces make it more difficult to eradicate insects and rodents, particularly when the fireplace is not in use during the summer months.
Discover Residential Property Management With This Step By Step Guide
People don’t know how to use them
While lots of people like the idea of a fireplace in their home, very few people know how to use them. Residents may overfill the fireplace or not close the protective screen correctly, resulting in smoke damage – or worse.
The obvious downside to an in-unit fireplace is the added liability. They will raise your property insurance premiums. If your tenants don’t possess renters’ insurance, you may be on the hook for any damage the fireplace causes to the property. Additionally, they pose a safety risk for your tenants and are particularly dangerous for tenants with children.
If you are on the fence about whether you want to remove or leave your investment property’s fireplace intact, there are several middle-ground options worth considering. For instance, you may be able to install a safer fireplace insert into the existing fireplace space. Here are just some of the alternative fireplace types available:
Replacing a wood-burning stove with a gas fireplace is a great way to reduce the risk and liability associated with a fireplace. Gas fireplaces maintain the aesthetic of a burning flame. Many gas fireplaces and inserts are fully self-contained.
Similar to gas fireplaces, electric inserts are a safe alternative to traditional fireplaces. While they lack the attractive look of a real fireplace, they are more effective at generating heat and are fully contained, reducing the overall fire risk.
These are easy-to-install fireplaces that don’t require an external venting system, meaning they can be easily transported between units. Ethanol fireplaces are safer and more effective at producing heat than traditional wood-burning stoves. They also run a significantly lower risk of starting a fire than your traditional wood-burning fireplace.
If you want the glamour and romance of burning wood with a lower level of risk, consider installing a pellet stove at your rental property. These unique heating devices use compressed wood pellets fed through an automated hopper to generate heat.
Regardless of what you decide to do with your fireplaces in rental properties you choose to invest into, it’s important to be aware of the costs, benefits and risks associated with maintaining it. Consider discussing the decision with other investors to get an insider’s view on whether keeping your property’s fireplace is worthwhile. Whatever you decide to do, the best decision you can make is one that’s informed by the pros and cons.
Now, to get the run down on how fireplaces in rental properties may impact your mortgage, click the link below for a free strategy call with our team at LendCity today.