December 18, 2009

Replacing a Broken Furnace

We got some bad news yesterday. The furnace in one of our rentals has broken down again. This is the second that furnace has broke in the past few weeks. The first repair was fairly minor and was only around $150 to get done. However this time the repair would cost us around $400. We had the same furnace break down last winter as well and I can't remember how much it cost to get fixed that time. The furnace is fairly old now at least 15 years and is likely to keep failing at this point. Rather than keep pumping money into repairing it we decided instead to get the entire furnace replaced. Repairing the furnace is about $2000. So we could spend $400 today on a repair or spend $2000 to replace it. Thats really a $1600 difference to get an all new furnace and not have the risk of more repair calls next month or next week.

This is a good reminder that if you want to own rental properties that you really need to have some working capital. If we didn't have $2,000 readily available to spend and we were on a tight budget then we'd end up just paying the $400 to repair the furnace. I see that as a short term solution that would end up costing more in the long run. You don't want to keep pumping money into repairing an old item.

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