Clients always ask me, “Is it more cost effective to buy new appliances or used ones when existing appliances in rental units fail?” Unfortunately, there is no easy answer to that question.
In order to find an answer to that question, we have to break down different appliance categories so we can draw some thoughtful conclusions.
There are some appliances that it makes sense to replace with new equipment if you cannot repair them. Garbage disposals, dishwashers and dryers fall into this category because the price point for new and used equipment is very close, so you might as well replace them with new units.
Stoves, refrigerators, and clothes washers tend to start at a higher price point and typically motivate you to start looking around for used or refurbished deals. Clearly, the choice also depends on the quality of property you own and the amount of cash you have available.
You also need to consider how old the appliance is that you own and the history of repairs you have had that appliance. It’s hard to find an appliance repair person that will come out to look or repair appliances for less than $125 per visit plus parts. If you are lucky, they will have the parts on the truck, or an appliance parts store will be nearby. If you are not lucky that turns into two trips and parts which could cost you $250. Most appliances have a 15 to 20-year lifespan. If your appliance is older than 15 years and you need to invest $250 in repairing it, I would suggest replacing the appliance rather than repair it. Appliances in apartment units may not last as long, because apartments tend to have more turn over than rental houses and as a result see more wear and tear.
Where to shop
You tenant’s refrigerator has failed, and you need a new one what do you do? The obvious choice is to buy from the appliance repair company you are using, but they may not have the appliance in stock, or they charge you more and another company or maybe they do not carry a brand you like. If you buy a used appliance, you need to ask some important questions. How old is the appliance? It does not make sense to buy a used appliance that is fifteen years old. A five to seven-year-old unit could work if it has been reconditioned. If you buy a refurbished appliance, you will want to know who refurbished it, what they did and if they have a warranty. Is it manufactured by a reputable appliance company? You will want to research online and ask your used appliance store what they recommend. You might want to go online and look up this buying guide to help you decide – (https://blog.yaleappliance.com/bid/86332/the-least-serviced-most-reliable-appliance-brands?utm_campaign=appliance-bg&utm_source=buying-guide)
You can also go:
- Online at craigslist.org to buy from an individual or from an Online Appliance dealer
- Go to a department store like Home Depot, Lowes or Sears
- Go to a specialty appliance store
Of course, you want to buy appliances that are well made and not all appliances are. Buying the least expensive unit in the market place may not be the answer. Consider if it fails within a year; the cost of the service call justifies spending little more to get a unit that has a good warranty policy and a record of few failures. Unfortunately, research shows that even the best units fail, just not as often. How could a washer help but fail when a tenant decides to put her jeans in the wash with twenty pounds of rocks to stone wash the jeans? Nevertheless, look for good reviews and talk to appliance repair people.
Best Time to Buy
If you can time your purchase, there are times when you can get a better deal.
For the best price do your research for rebates as they can be up to 35% of the product value. The best rebates seem to occur around holidays like:
- President’s Day
- Memorial Day
- Independence Day
- Labor Day
- Columbus Day
- Veteran’s Day
- Black Friday (or Cyber Monday)
If you are planning a renovation, see if you can plan ahead or maybe your favorite appliance installer can get you contractor pricing if you are renovating a group of apartments.
Don’t forget that most appliances have three additional costs affiliated to their replacement: installation, delivery and removal of the old appliance. These should all be included in your calculations regarding appliance replacement.
The market is constantly changing giving you an opportunity to upgrade the living environment for your tenants and your ability to be more competitive and maybe charge more rent.
Recent innovations you might want to consider including:
- The quieting for dishwashers down to 39 decibels. (Look into American made Bosch and Kitchen aid dishwashers.)
- Vented vs non-vented dryers. Europe has had these dryers in place for a long time (https://www.reviewed.com/laundry/features/everything-you-need-to-know-about-ventless-dryers)
- Voice and WIFI controlled appliances
The crystal ball has spoken and the answer to our question is… it’s really up to you and your vision for the appliance you are replacing. If you can afford it, by all means, replace a broken unrepairable appliance with a new one. Your tenants will love you for it and might even extend their stay. If you don’t have the money, replace the broken appliance with the best used appliance you can afford. Remember all appliances will wear out and will need to be replaced at some point or another.
Clifford A. Hockley is President of Bluestone & Hockley Real Estate Services, greater Portland’s full service real estate brokerage and property management company.. He is a Certified Property Manager and has achieved his Certified Commercial Investment Member designation (CCIM). Bluestone & Hockley Real Estate Services is an Accredited Management Organization (AMO) by the Institute of Real Estate Management (IREM). Cliff is also the author of Successful Real Estate Investing – a book on how to invest wisely, avoid costly mistakes and make money.