Easy to over-do-it when it comes to Real Estate Rehab.

Every real estate developer and rehabber confronts the Problem with each new project– “Where do we stop when it comes to updating a home built 50 or 75 years ago?” The question came up at this February’s Investor/Rehabber Seminar. Father and son developers and dealers disagreed on whether or not to remove the functional steam heating system in favor of a new forced air system.

In this case the system was functional, but the furnace “needed help”. It appeared rusted out and and gave the appearance of a dilapidated system. In fact it seemed to “work just fine”, but what about the evidence of rust on the furnace cabinet?

There are really two problems here.

The first is the fact that though the system worked well, the furnace 'looked bad' and, secondly, these days everyone seems to expect forced air as a feature of modernization. The answer lies with the developer’s intent. If the property is to be resold, then cosmetic features do need to be addressed.

There’s rust around the base of the furnace cabinet? Two choices here: Sand down, prime and repaint the furnace cabinet (I like that alternative), or (2) scrap the furnace in favor of a new one.

May be a tough choice. If I were a landlord, I’d clean up the appearance (repaint the furnace cabinet) and postpone replacement for another day; here we're concerned with function, not cosmetics. If my plan is to resell immediately, I will consider replacing the furnace (as a selling feature and marketing expense) while retaining the piping and radiators. (It might be a good idea to replace the 'traps' to restore full function, but that's a discussion for another day.)

Most importantly, I wouldn’t hurry to replace the entire system with forced air unless we're contemplating adding central air conditioning; but we need to recognize that many markets won't support that added investment. The “public” might perceive forced air as the ‘modern alternative’, but forced air heating is inherently less efficient than steam or hot water radiant heat (explain this as a Selling Feature). Here, the responsible choice is to work with the system already in place. #