Investing Basics

Pay Close Attention to HVAC When Evaluating a Property

Pay Close Attention to HVAC When Evaluating a Property
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There is no greater fear for investors than buying a rental property only to find out something is seriously wrong. Maybe the roof is leaking, or there’s termite damage? When winter comes—one of the worst things for you or your tenants is an HVAC system that doesn’t work.

Table of Contents - Pay Close Attention to HVAC When Evaluating a Property

As a landlord, you’re bound to have some issues with the HVAC system. As a real estate investor, you want as much return on your investment as possible. By asking questions and doing a thorough inspection before buying a rental property, you can avoid having a faulty HVAC system eat your profits.

The following tips won’t replace the expertise of a licensed home inspector or HVAC technician. But, they can help you ask the right questions and make an informed decision about your investment.

Visually inspect the HVAC equipment

A visual inspection won’t help you identify every issue but can show signs that something is wrong. Furnaces and air conditioner units are often located in basements or utility areas. Air conditioner condensers are typically located on the back or side of the house. Both should be easy to find and inspect.

Ask about any strange noises, leaking, or visibly broken or poorly maintained equipment. Flag any issues for your home inspection, and consider hiring an HVAC technician for a closer look if something just doesn’t seem right.

Locate the system’s energy label

Ideally, the HVAC equipment will have an EnerGuide label showing the product’s energy performance rating based on Canada’s Energy Efficiency Regulations’ minimum standards. The EnerGuide label displays:

  • Annual energy consumption;
  • Energy consumption indicator, comparing the unit with other units in its class;
  • Type and capacity of models in the unit’s class;
  • Model number.

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EnerGuide labels are voluntary for central air conditioners, furnaces and heat pumps. The white EnerGuide label may be displayed alongside a yellow American EnergyGuide label. The test methods and standards are similar, but the ranges may vary depending on types of models available in each country.

These labels can help you determine how efficient the current unit is if you’re debating replacing the HVAC system shortly.

Ask about the HVAC system’s age

An HVAC system has a lifespan of about 15 years before it needs replacement. While many systems can operate well beyond that, newer models are more energy-efficient and will save money in the long run. If the rental property’s HVAC system is approaching 15 years or older, factor the cost of a new system into your purchase plans.

There are additional monetary incentives for upgrading your rental property with energy efficiency for HVAC and more. Natural Resources Canada compiles a list of financial incentives by province.

Ask about past maintenance

As with buying a used car, you’ll want a complete history of the HVAC equipment. Ask the current homeowner for a history of the unit. Ideally, technicians who have serviced the unit in the past have left a dated job ticket on or near the equipment.

Regular maintenance isn’t a bad thing; large appliances like HVAC systems will always need repairs. If you’re able to find a job record, look for frequent visits or large repairs like a compressor or blower motor. This could signal bad things to come for the system.

Pay attention to room comfort

It can be hard to get an accurate sense of how well the HVAC works. But, if you feel temperature changes from room to room it may be a sign the system isn’t working properly. If one room feels warmer or draftier than others, it could be a sign of leaking or poor insulation. Be sure to clarify that the air conditioning or heat is running before making a judgment. If you’re able to look at the thermostat, it may also offer a clue about how well the HVAC system is working.

Speak up!

The most important thing you can do is ask questions. Sellers may be incentivized not to tell you the truth about a faulty system, but it’s always better to ask. Don’t be afraid to ask to see all the HVAC equipment, to ask for maintenance history or when the units were purchased. Asking questions is the best way to protect yourself against a bad investment.

Take care to inspect a prospective property’s HVAC system as thoroughly as possible before you commit to investing. Be sure to inspect the equipment and ask as many questions as you can. Taking simple steps can save you from discovering a big problem after closing.

How to Visually Inspect the HVAC System

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