How important is central air in a rental home?
So, really, how important is central air anyway? Can't tenants just get a fan or a window unit?
We get this question a lot from investors and homeowners who are looking to rent their investment property to a new tenant. Is central air worth the cost? It is too expensive to put in for not much of an investment, right?
Well, according to a study by Zillow, tenants in the Metro Detroit area are willing to pay on average an additional 2.4% in rent for a home with central air conditioning. In many cases, central air is more important to renters than great outdoor space or nice patios.
What does that mean to a landlord?
Well, the cost does depend on the size of the home, of course. On a house around 1,000 square foot in size, the cost would be around $1,500. (Don’t quote me! We would get an actual quote for you.)
If the average rent is about $1,000 for that house, the increase would take the rent to around $1,025. That cost would take about 60 months to pay for itself, but that isn’t the only factor. A house with central air will rent quicker, allowing you to fill it more quickly between tenants than a home without air.
The central air also comes into account when you decide to sell the investment property. In Metro Detroit, that number is on average a 5.8% premium on the sales end. Taking a $100,000 to closer to $105,000 which would more than cover the original cost.
While the final decision to install central air-conditioning is up to the investor, the decision on what house to rent comes down to the tenant. Heck, isn’t $25 per month worth it in a hot, humid Michigan summer?
Brian DiBartolomeo is the owner/broker of Cherry Hill Real Estate | Aspect Properties in Pontiac, Michigan. CHRE helps investors find new properties and provides property management services throughout the Metro Detroit Area.