Your heat dies tonight. Is the replacement already planned?
The plan starts with one list: what you own and how old it is. Here’s what happens without it.
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Last week I told you about an inspection report on a property I invested in. It said the air conditioners were over 20 years old. I saw it only after I had invested.
A capex plan got built (the big replacements), after the partner who lived close by looked at everything. My other general partners owned more of the deal than I did. They ran the standard asset-management playbook, which is financial and rent focused, and didn’t see how much the building drives it.
Their answer was “We can’t plan for this.”
A year and a half later the properties sold at a loss. The capex got out of control and consumed all the cash flow, which is what I had called. My part: I didn’t look closer, sooner.
That’s why the record comes first. If you don’t know what you own and its age, no one can plan for it.
In June 2021, I walked every apartment at two of my communities and logged what heats and cools it, how old the blower is (the indoor fan unit that moves the air) and how old the water heater is. I sorted age into bands: new (under 3 years), average (3 to 15), and original (16 or more).
At the first community, 54 of the 103 blowers with an age on the tracker were original. At the second, 18 of 110. The first community’s replacements were bunched and coming first; the second’s were spread out.
Short on time? Do this one thing: This week, get the heating, cooling and utility lines of the Register tab filled in and checked.
Before you start, download the Building Owner’s Workbook.
What it is
An asset register is one list of everything in your building that wears out, and every utility that feeds it. It’s your building’s knowledge base, and where the plan starts.
Step 1: Name your team, and who does what.
Write down who helps you run the building: your property manager (PM), your maintenance lead and the vendors you call. Who does what, my recommendation:
The data-tag walk: your maintenance lead or a technician photographs each tag. You review the photos.
What’s on file, and contracts and test reports: your PM and each vendor send theirs.
Write each name in the register’s Serviced by column.
Step 2: Start the Register tab with heating and cooling.
Date the Register tab. Then give each heating or cooling system one line: make, model, and serial, capacity (how much it puts out), install year and how you know it, and who services it.
Your maintenance lead reads the data tag (the label on the unit) for the model, the serial number, the date made and, on cooling units, the refrigerant (the gas that carries the heat). The date made gives the exact year, which my “16 or more” band could not.
A walk tells you which system you have. Five you may find:
Boiler: steam has cast-iron radiators and a glass water gauge. Hot water has baseboard or radiators, pumps and an expansion tank.
Gas furnace: a closet unit with an exhaust pipe, and a gas meter per apartment.
Heat pump: an outdoor unit per apartment, an air handler in a closet, no gas. It cools too.
Electric heat: strip heaters in the air handler, cheap to install and costly to run.
Through-the-wall unit (PTAC; PTHP for the heat pump kind): a grille under each window.
For example: “HP-2BR · heat pump · hall closet, 24 two-bedroom apartments · make, model, serial, capacity · 2012, read off the tag’s date made · tag photos on file.” Yours will be different.
Step 3: Add each utility, with five facts.
Electric, gas, water and sewer each get a line of five facts: meter number, rate structure (the price plan the account is billed on), provider, who pays (you or the resident), and the service equipment where it comes onto the property, with who owns each piece.
Have your property manager send a recent bill for each utility and copy the meter number and the name of the rate plan onto the line (a demand charge is a price for the most power you pull at once). Then ask the utility who owns its equipment on your property, such as a transformer (the box that steps the power down); it may be yours or the utility’s.
For example: “electric, house meter · number from the bill · demand-charge rate · power company · owner pays · transformer on the lot, utility-owned per their letter.” Yours will be different.
Step 4: Add other systems as records come in.
Your team fills these in. A blank is fine if you note who you asked. Start with the roof, water heaters, electrical service, fire alarm and sprinklers, and elevators, then the rest as records come in.
Step 5: Check it
This week, check the heating, cooling and utility lines your property manager filled in on the Register tab.
Spot-check three lines against their data tags. A missing or wrong year means the list is a guess.
Flag what’s near the end of its life. For heating and cooling my rule of thumb is 15 to 20 years.
Get the utility’s written answer on who owns the transformer.
Judge the condition you can. For the final say, ask a professional, and record the finding with the date.
If the power goes out, does any heat or cooling stay on? Gas heat runs on electricity too. A standard inspection won’t show you this.
For example: “The tag says 2012, the register says 2015 ‘from the lease file’. It looks finished but isn’t, so fix it.” Yours will be different.
Hand it to your property manager: “Send me the meters, providers and who pays.”
Why it matters
Units that went in together come due together. In my 2021 walk, 24 apartments had an original blower and an original water heater, so one visit can replace both.
An old unit may have no simple match. Air conditioners built for the refrigerant R-22 stopped being made in 2010, and R-22 itself in 2020. A new outdoor unit can’t go on the old indoor coil (the part inside that cools the air).
On a larger account, a demand ratchet lets one month’s peak set your minimum demand charge for up to a year.
What I look at: Equipment past its useful life, first. Sort your register by install year. For heating and cooling, my rule of thumb is 15 to 20 years, when the equipment was right for the building, well installed and maintained. Anything older goes to the top, so you price the replacement before it fails.
This week you
Dated your register and had the heating, cooling and utility lines filled in.
Named your team and who does what.
Checked the lines against the tags, and flagged equipment near the end of its life.
Next week: why a list without repair history can mislead you, and the one line that fixes it.
Know another owner who’d use this? Forward it to them.
—Jon