Happy Halloween! We have a new real estate investing horror story for you today! Our last halloween horror story was a story of a Grand Rapids investment acquisition, late payments, and evictions. This story, from the depths of Kalamazoo real estate investing, starts out seemingly innocent. A four unit apartment building, a broken furnace, a maintenance call, a seemingly easy fix… But that’s where it gets TERRIFYING! Keep reading or watch the video to hear more!

The Furnace From Hell

In the deep, cold days of January 2022, we received a call from a tenant living at a 4-unit in Kalamazoo. Their furnace had broken down. We immediately replaced the furnace. Seeing as we didn’t make any changes, to the heating system, we thought all was well.

That’s where it all went downhill…

The Scary Part

When the city arrived to inspect the final repair, they informed us that we can’t have “shared air” in this (previously inspected and approved) apartment building.

This is where it gets really scary….

The city inspector said this unit has to have FOUR INDIVIDUAL FURNACES in replace of the previous ONE furnace. If that doesn’t scare you, let me break it down for you:

  • All New Duct Work
  • Three Additional Furnaces
  • Three Additional Permits
  • Etc…

Can it be Saved?

This is an incredibly expensive undertaking. Especially for an unexpecting real estate investor. The unfortunate part? There still isn’t a resolution. We have gotten to a place with the City where we now have two options:

  1. The original option: Install four expensive new heating systems.
  2. OR work with an engineer to draw new plans for some type of closed air system with new duct work and dampers.

So as you can see, both of these options are incredibly expensive and a massive undertaking.We are still getting quotes and trying to figure out the best solution for both the investor and the tenants. The other side of this scary situation is what it means for the future of apartment units that are in this shared-heating situation now!

Words of Caution

We will leave you with these words of caution: If you are buying a multiunit in Kalamazoo that has its units serviced by one furnace, you may want reconsider or pad your reserves.

We share this horror story to help you with your real estate investing decisions. Knowing a story like this, will change the way you underwrite a property. Want to hear another horror story? Check out our previous story here!

About the author

Aaron has over 13 years experience in property management. With a focus on accounting and the “numbers” aspect of real estate, he loves to see a good investment succeed. He also enjoys talking to new investors and helping them overcome hurdles to their success.