QLD Tenant asking for replacement air con units to reduce her power bills

Discussion in 'Property Management' started by Rezix, 9th Jan, 2019.

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  1. Rezix

    Rezix Member

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    Hey guys,

    I have an investment property (4 brm house) in Arana Hills, QLD & the current tenant has now been in there for about 10 months (12 month lease - due to expire in March).

    She has recently emailed my property manager stating that her power bill was higher than expected and assumed this was because of the air conditioner units in the lounge room & kitchen - so asked whether I'd consider having these units removed and replaced with one newer split system unit.

    I asked for some photos of the current units and it looks like they are fairly old National Reverse Cycle wall units (unit number CW-120AH) with dials for fan strength and thermostat.

    Both times I've had to rent out this property, it has taken a while to secure a tenant, and required some rent reductions, which makes me want to keep the current tenant happy in the hope of her staying put - but at the same time, I'm conscious of the fact that it can be quite expensive to replace and install new AC units, especially when the current ones are still working ok (if a bit inefficiently due to outdated technology).

    Therefore just wanted to see if anyone has advice around this or experience?

    One idea I was thinking of is that I could potentially offer to replace the air con units if the tenant agrees to sign a new 12 month lease at a slightly higher rental amount (say +$10 per week or similar) in exchange?

    Thanks in advance!
     
  2. Wiz

    Wiz Active Member

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    I had a similar experience recently. Tenant complained that the pool was costing too much money to run because the filter/chlorinator needed replacing. A pool person looked at it and said that the filter was leaking and the chlorinator was getting past its prime.

    I decided to replace them because I know they are old and would need replacing eventually anyway. I could have left them for a bit longer, but the rental market is a bit slow at the moment and these tenants have been good. They also pay a decent amount in rent and I would like to keep them.

    If you find yourself in a similar situation then it might be worth replacing the units. I did negotiate heavily on the price of the work though, and got the quote down by $400.
     
  3. marmot

    marmot Well-Known Member

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    Sounds like their the older big hole in the wall types.
    But there is no guarantee that the electricity bills would come down significantly
    Would it not work out cheaper to install a small solar panel unit.
     
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  4. Pumpkin

    Pumpkin Well-Known Member

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    If you like the Tenant, one option is to give discount to the rent, subsidising her power bill. And look at replacing AC later after summer.
     
  5. Scott No Mates

    Scott No Mates Well-Known Member

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    Are they on the cheapest electricity plan? Maybe suggest they used it less or install ceiling fans?
     
  6. Michael Mitchell

    Michael Mitchell Well-Known Member

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    If it were me, I'd actually choose to spend any money on a solar system as they've come down in price so much, it's a big positive for any renters of the property, an asset for your property, and will of course assist the tenant with their power bill, and help rent it out in future. At the end of the day though, their request is not a reasonable one, if they move on they move on, next! :)
     
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  7. Wiz

    Wiz Active Member

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    On what basis does she think that the age of the air conditioners are responsible for her rise in electricity bills? Hasn't it been hot lately? Don't people use their air conditioners more when it is hot = higher electricity bill?

    If the air conditioners are getting close to the end of their life then I do think it may be worth your while to replace them now and keep her happy. If they have years left in them then I think that replacing them would be silly, especially since there is no basis on which to think it will solve the problem.

    Can you have someone check them to see how they are going?
     
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  8. Shogun

    Shogun Well-Known Member

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    The thing with wall mounts is if you replace with a split system you either need to patch the wall or leave unused AC there.
    Units wear out so replacement probably is a good idea if 10+ years old. New wall mounts might be cheapest option.
     
  9. Rezix

    Rezix Member

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    Thanks for all of the replies / input!

    I hadn't even considered installing a solar panel unit, so will have a look into that now as an alternative or additional option.

    In the mean-time, my business partner suggested I ask for a copy of the power bill, as well as for quotes for replacement air con units + installations to be organised, so I've asked the property manager to organise this for me.

    Can't really tell how old the air con units are - I guess they were already in place when I bought the property (sight unseen through a buyer's agent), which makes it hard to tell whether they are towards the end of their life or not... But they look pretty old, so yeah might be worth considering replacing as some of you have suggested.
     
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  10. Wiz

    Wiz Active Member

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    Good plan.

    Don't forget to check those quotes, ring around and check prices elsewhere, and negotiate on prices if needed.

    I have found that my PM gets quotes from people they have used before, but they are not necessarily the cheapest or best. I also suspect that these people hike up the prices a bit when they know it is for an investment property in the hope that the landlord will just assume that the PM knows best.

    A recent quote organised by my PM through a company they use all the time was $400 more expensive than quotes I got myself. When I rang the company and told them that, they immediately reduced their price by $400. This same company had also recommended some additional items that I was able to purchase myself for $300 cheaper. So for minimal effort I saved $700 overall.
     
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  11. Tom Rivera

    Tom Rivera Property Manager Business Member

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    Those old box units do chew power compared to modern split-systems, and it's likely that's quite an old unit.

    I'm not a big fan of solar, none of the tenants down my way seem to have any appreciation at all for it. Might be different in other areas?

    Get a copy of the power bills and quotes for a new split-system. The PM can feel out your tenant for how they would respond to a rent increase, or maybe they could sign an especially long lease (e.g. 2yrs), in exchange for the new air-conditioner. Also no reason you can't just leave the box unit in the wall where it is- it still works, and you wont need to patch the hole.
     
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  12. Greyghost

    Greyghost Well-Known Member

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    Sign lease - pay for new air con?? Crazy.
    Tenant inspected and signed leave.
    If it’s a dispute get them tested by an electrician.
    Otherwise, tell your tenant to go buy a fan.
     
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  13. Rezix

    Rezix Member

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    Hey guys,

    So I got a copy of the quarterly electricity bill, which came out to $850.68. Appears to be on a 28% pay on time discount plan, which makes the net cost for paying on time = $617.39.

    Tenant is a self employed cleaner + single mum of 3 (15, 9 & 7 years old), with a dog and the property is a 4 bedroom house, with an old "box style" air conditioner, so not sure how much this aircon unit would be contributing to costs.

    Also got a couple of quotes for the air con installation:
    1.) 7.1kw Fujitsu Split System + 3.5kw split system; both with 5 year warranties and installation - for $5,000 inc GST.
    2.) 4.6kw Carrier split system + 9.2kw split system; both with 5 year warranties and installation - for $4,849.40 inc GST.

    Any input on how best to proceed from here?

    Cheers!
     
  14. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    The tenant would have a $0 cost for the AC if she didnt turn it on !! There may be some minor reduction in costs for a modern efficient model but it wont be much if she thinks its cheaper to run and flicks the switch on more often.

    I wouldnt bother.
     
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  15. Scott No Mates

    Scott No Mates Well-Known Member

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    I've just installed two large splits in at IP. There are some govt incentives available provided the units selected are the most efficient on the market etc.

    Helps ease the pain in the Hop pocket.
     
  16. Tom Rivera

    Tom Rivera Property Manager Business Member

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    THOSE QUOTES...! $5,000 to install two units!?

    Assuming full retail paid, the 7.1kW is worth $1,698 and 3.5kW is $998.. they want $2,300 for install!!!! The smaller unit should be $500 and the larger unit up to $700 (new circuit needed) to install! That's $1,000+ that you should DEFINITELY not be paying. Is Sydney really that expensive?

    For reference, you'd be paying $2,700 through us for 7.1kW and 2.5kW Rinnai units on a reasonably straightforward install assuming new circuit needed for the larger unit.
     
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  17. wylie

    wylie Moderator Staff Member

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    With three kids, that electricity bill isn't that high. And those quotes are very high.

    Can you put up the photos of the units? Do you think they are the cause of the place taking longer to rent?
     
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  18. Rezix

    Rezix Member

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    Thanks for the responses guys - have attached photos of the current air con as requested.

    Not completely sure what caused the issues with renting in the past, but at the suggestion of my leasing agent, I had some renovations to the house completed prior to the tenant applying (new carpets, ceiling re-painting etc) and installed ceiling fans at the request of this incoming tenant.

    Maybe these factors would reduce the leasing time if this tenant moved out and I had to re-let? Just a risk either way...

    Noted that the quotes may be inflated, so worth shopping around a bit further if I proceed to consider installing air con - but it's a pretty big investment regardless, so likely wouldn't want to do it unless it really feels warranted, and in exchange for a long new lease being signed at +$10 or +$20 pw rent.
     

    Attached Files:

  19. Wiz

    Wiz Active Member

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    Wow, that's an old unit! I'm impressed that it is still running. They don't make things like they used to.

    I would think that replacing it would add value to your property and increase it's attractiveness to new tenants.

    Bunnings can supply and install air conditioners fairly cheaply.

    You can also get a rebate from NSW government if you install specific models. Their website gives you a list of the eligible models:
    Discounted energy efficient air conditioners for households
     
  20. mikey7

    mikey7 Well-Known Member

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    Wow, super old! Definately replace.
    Bing Lee, Good Guys etc can arrange install too.. and heaps cheaper.