Switching old fridges - is it worth it?

[TangoWhiskey]

This post is a related post to yesterdays looking for input on per unit energy costs. Thanks to Mark and Thomas for replies.



There is a gov't program here until December that offers discounted fridges incl delivery and removal of the old ones to multi-family owners if fridges are 10 yrs old or more. I have 17 such fridges in my building. New apt sized fridges of 10 cu ft will cost me 415 $ after the rebate incl taxes and all charges.



The one old fridge I checked will save approx 100 kwh at about 13 cents per kwh or 13.00 $ yr in savings. On an energy savings basis this is not a great deal hence the gov't program, but on the other hand tenants will be happy and most importantly all those fridges are 10 yrs old or more. If I did this I shouldn't have any fridge repairs or replacements for at least a decade to come.



What is the average lifespan of a fridge? Is it worth switching them all out? Or should I pick and choose the most inefficient/oldest ones?



Thanks again to those answering in this great forum.



Tris.

 

[invst4profit]

There is next to no economic value to replacing a fridge before it's time especially if tenants pay for hydro.

At a savings of $13/year your payback is 32 years on the life of a fridge which may only be 10 years.



If it ain't broke don't fix it.

 

[Thomas Beyer]

Fridges last a long time .. 15-20 years.



Do it only for the add'l rent you could collect .. not on energy savings alone. Assuming a 30% annual tenant turnover you can get maybe $50 more in rent .. or more with add'l cosmetic upgrades like paint, lino, carpet, new door handles, baseboards, lights ..



This assumes you live in an area where rents can be raised which is not always possible due to socio-economic status of area or property curb appeal.



Do the math on a 5 year model .. assuming prudent rent increases and related VALUE UPSIDE. A rent increase by $100 will increase unit value by $8000 to $15,000 depending on CAP rate and market, so on a 17 suiter that is an easy $100,000 .. tax preferred and tax deferred .. until sold !



It is a proven ticket to wealth creation.



No, let me re-phrase this: it is THE ticket for wealth creation !



Improve the world / communities & your own (or your co-investors') networth by sensible property upgrades !!



We do it on an ongoing basis .. for over a decade .. so do the math and then decide !

 

[bizaro86]

How much is the rebate?



If you're planning on holding this building long term, you'll have to replace those fridges eventually. (When they fail)



Case 1:

Take the rebate: fridge costs $415 now, savings of $13 per year

Year 1: -415

Year 2: +13

Year 3: +13

Year 4: +13



Case 2:

Buy the fridge later, whenever it dies

Year 1: 0

Year 2: 0

Year 3: 0

Year X: -415+rebate



Evaluate those two scenarios, using the amount of the rebate and your best guess at how long the fridges will last. I'd also think there might be some savings on buying the units if you buy 17 at once versus buying one at a time over a period of years.



Regards,



Michael

 

[invst4profit]

How is a landlord to determine exactly how much more rent they will get by simply installing a new fridge. If it is done for a existing tenant then there is no benefit. At what age does a fridge no longer have a positive impact on rent increases.



Upgrades are necessary and positive but in the case of appliances the return may be negatable once that new fridge is 2-3 years old and may be ignored by a tenant. Therefor pay back must be immediate. The impact of new appliances is most effective only with new tenants and only with the first new tenant to have that appliance.in my opinion.



If a new fridge could generate a payback within one year through increased rent it could be worth replacing a old fridge but not for energy savings alone. Calculate how energy rates on appliances impacts rent increases and then do the math. The potential rent increase one could atribute to energy efficiency alone is likely zero.



If a upgrade does not increase rent with a very short payback the advantage is minimal due to the fact that the upgrade immediately begins to age and therefor loses any impact it may have on future potential rent increases..



Upgrade, reno between tenants and only if a immediate payback is attainable through higher rents. As previously mentioned one should not make decisions based on energy efficiency unless the numbers work. Do the math and you will see the numbers do not work based on energy savings.

 

[kfort]

[quote user=invst4profit] At what age does a fridge no longer have a positive impact on rent increases.




I personally would change this to "at what level of ugly does a fridge impact ease of renting?" This of course assumes you are targeting tenants who care about such things. I'll spend $450 to make my life easier. If I'm going to be vacant for a time period, or making extra trips to show that end up in a "maybe" or "no" from applicants based on the ugly factor, I'd pop for the new one.



Also, investigate if there are any rebate programs in your area. here in SK Prov government sponsored a "remove old fridges" (1995 or older) program... they paid you for it... of course the "spots" were few and far between and filled up within a couple weeks but it's still worth investigating! I redid a basement suite, got $50 for my fridge, they took the old oven out because they were there (for free), and the lino guy gave me $125 off for not making him move appliances! Ended up paying about $250 for a brand new fridge!

 

[TangoWhiskey]

To add some detail, in this case the gov't program is for a 200 $ rebate on top of whatever discounts they throw in off retail. Case in point: I bought a fridge in Feb for 440 that I had to hire a vehicle to take to my building one hour away (100$). In this case, I can buy the same size fridge for 338 after rebate and they deliver and remove the old one.



As people pointed out, it is not worth it for energy savings. But since most of the fridges are old, I was looking to get input on how long fridges typically last before starting to incur maintenance charges plus look dated and shabby.



Thanks though as your answers helped me to decide to replace only those that are both old and look in bad shape.