How old is too old?!
HI all,
I found a multifamily foreclosure for $12,900 in my hometown in a B/C area. The house was built in the 1900's and i'm a bit leary of potentially buying a house that old. Thoughts?
What should I be looking out for?
I have a duplex built in 1900 -- bought it cheap, but not 12,900 cheap -- however, it had updated systems.
How old is it, and how many units are in it? I'm trying to image what improvements a big, old apartment building for sale @ $12,900 would NOT need...
Any photos?
It depends on who you are, I am one of those people who really likes old buildings so to me there is no age that is too old at first pass but you have to be up for the challenge and even if you are you can lose enthusiasm at times. In addition some properties will take more then you have. Our most recent purchase was similarly old. I believe first built in the 1700s but I am too busy on bringing it up to the 21st century to do much history at the moment!
There is what is the rehab, what is it going to cost in time and money- to be weighed against what will the product be when you are done. The ones I favor are those that are in the end something lovely you could not afford to get today. For a multi it also has to command rents that cover that rehab
Whether you think you are going to do it or not I urge you to take a look-it is in your town after all. Seeing what you are walking away from even if you ultimately do walk away is better then just hearing people say don't do it. Be mindful that the work you see may only be half the picture and there are secrets behind the walls that many here have mentioned. Keep in mind your limitations - you will need to contract some things out- lead and asbestos you can't do it all yourself. Don't get taken away by the idea - run the numbers. Good luck
@Drew Denham Here In Providence/Boston, 80-90 % of properties were built around that era. I havent seen too many investors knock down these properties- avg rehabs are usually anywhere from $10k - $30k(Providence) $25k - $75k(Boston), if youre dealing with a mostly cosmetic rehab. I say this bc since most of these properties have been occupied throughout their existence, it is very likely that some updates to electrical/plumbing, roof etc. has been done. If not- it will definitely get costly and there are some properties that may be more cost effective to knock down and rebuild rather than rehab depending on the extent of work (lol- or avoid all together). I guess it all depends on how much it will be worth in retail condition (or income it can ultimately produce). I'd think abt it like this....if the rehab isnt feasible- I am comfortable buying the lot at this price and is there enough room for a profit at the end of a rebuild? If there are a lot of other similar properties in close proximity- I'd stay away.
I love old homes.
I have a friend in Boston with a house where the basement has a tunnel that leads somewhere, but was "walled off". He thinks it might have been used for smuggling at one time.
We've bought houses built in the 19th century. It all depends on the quality of construction and how well it was kept up. It's certainly more risky and you should expect higher maintenance and unforeseen issues popping up during the rehab. But old properties can still work
@Drew Denham Old is not necessarily bad when it is the exterior with rehab interior. By the price you quoted though i suspect it hasn't been updated and it depends if you want to take on the rehab and what you'll have when done. I closed a 4 unit portfolio last month that consisted of a 12 plex built in 1890, 8 plex (converted house) in 1920, 19 unit rehabbed school from 1925 and 21 unit school from 1910. All were rehabbed in the '90s. I bought another rehabbed school in 2013 that was built part in 1899 and the other part in 1929. All are all brick and will outlive me. A good rehab makes these desirable buildings but caveat emptor.
My own home was built in 1892. My "town" rental was built in 1910. If a property is structurally sound, you can update the mechanicals (which can be a PIA, just because the things we want in homes today didn't exist 100 years ago). Cosmetically, they can be updated ad infinitum, although I try to keep as much of the old detailing as possible. Creates "charm." Half (or more) of the houses in this town are 100+ years old, so people expect "vintage" accommodations. That may not be the case in your area.
Honestly, if someone GAVE me a house that was 20 years old, I'd sell it as fast as I could & go buy another old one. But that's me. You might be much more comfortable with a newer model.
The real questions center around the ARV.
While 12K seems really cheap to some of us we don't know your local market, @Drew Denham , if there are any realistic good comps for this property you can get a good sense. of if the deal is worth it. Earlier this year I looked at a historic carriage house that was a MONSTER rehab (+/-500k), where it would have cost more to rehab it then to tear down and build a 4000sq-ft house but it was deemed historic. We had comps to support a valuation of 1.25M so it made sense to take on all the potential problems because there was a huge spread. Ultimately the owner decided he did not want to sell right now and took the property off the market, but ultimately its all about the numbers.
Often comping these old houses, especially if its a Waldo as @Ben Leybovich discussed in his most recent podcast then the value could be extremely volatile depending on who appraises it.
These houses can sell for a premium but as a GC I would recommend you watch the movie the money pit before really jumping into one of these projects. They are not for the inexperienced, under-capitalized, and don't work in cheaper markets.
all good answers. but lets look at it this way. the white house is a 1700's house and look how many people keep trying to get in there. an older house is not a big deal as long as the bones are good
Originally posted by @Sam Leon:
I love old homes.
I have a friend in Boston with a house where the basement has a tunnel that leads somewhere, but was "walled off". He thinks it might have been used for smuggling at one time.
The USA had a period in its history where the ugly thing called slavery happened; the tunnel might have been for the use of slaves escaping to freedom in the northern states.
One thing not yet mentioned is historic districts. It can be a pain to maintain the property's appearance to historic standards, and it is almost always way more expensive. And there will be some historic committee that will have to approve everything being done in the historic district; that translates into delays and denials for the permits. So check whether the property is in such a historic district, and if it is understand what the historic committee will expect.
Originally posted by @Sam Leon:
I love old homes.
I have a friend in Boston with a house where the basement has a tunnel that leads somewhere, but was "walled off". He thinks it might have been used for smuggling at one time.
Possibly, or for hiding passengers of the underground railway, or perhaps it's simply an old steam tunnel and there was a shared boiler/heating plant in the neighbourhood at one time.
Grand Rapids is an old town so much of the available housing stock will be aged. I would not worry so much about the age as the condition, location, repairs, rent rates and tenant pool.
Grand Rapids has many beautiful, expensive and well preserved turn of the century homes that are in strong demand. Don't pass because of her age only.
I live in a home built in 1914 with 3 apartments added on in the 1970's, it's a very solid home and we got a great deal on it. It however had been well maintained over the past 100 years. I also own and manage a number of historic homes and have rehabbed a number of homes in the area.
Definitely check if it's in a historic district, and if it is, how they are to deal with. Most of the old buildings I've dealt with are in a historic district but they are fairly easy to work with. However this varies wildly with the area. Also if your not familiar with old homes, make sure your inspector is and preferably your contractor also.
The biggest thing that concerns me is the numbers, make sure you have a nice spread. Around here you can pick up plenty of old homes but at that price they'll be in the "wrong" neighborhood. People do buy rentals in that area but are generally just hoping for gentrification. I prefer not to hope and don't like renting in "war zones". This of course varies by area and what your particular strategy is. A lot of people made big money buying in the neighborhood I now live in before gentrification. They also dealt with prostitutes and crack houses for a number of years.
I get a bit of extra satisfaction on bringing old homes back to their former glory, not to mention making money while increasing the value of my home by continuing to revitalize the neighborhood. I believe Jacksonville has the largest number of craftsman style homes in Florida. I'm a big fan of them. Anyways just do your due diligence, as on anything else and you should be fine.
Sometimes the price might be worth the gamble but keep in mind, location....location...location, then what is appealing about the old house, and lastly will the property cash flow after the rehab?
I had an old mansion located in a historical part of town that was converted into a 6 units. Spent $350,000 on it and had to rehab it. The mansion had a lot of character and the location was close to a hospital, very hip little shops, bars, restaurants and parks etc. I never placed an add in the paper to rent. I put a sign out front and I would have an unbelievable amount of people respond to the sign. The property was a cash cow.
If the house is in a good location and there is something appealing about the old house it might be a good buy. Make sure you find out what kind of repairs you are going to have to put into the property and then find out what kind of rent you can get out of it. The bottom line to purchasing a investment property is cash flow.
Good luck.
not sure if anyone mentioned it, but LATH AND PLASTER = terrible to patch.
i have a rental built in 1915. bought it when i was young an dumb. knob an tube, terrible plumbing, and lath and plaster walls. I HATE trying to patch them.
I fully agree with everyone, but at the same time i would buy another one if the price is right and the numbers make sense. I do most of my own work so all these extra pain in the a** extra items just mean you gotta work a little harder during the renovation to earn your porridge ;). key is that it must have good bones and good neighborhood.
Since a LOT of serious stuff is already taken care of here goes.
I would look for
1) War Bonds in the walls.
2) Old Newspapers
3) Mementos from the Civil War
4) Old Indian Burial Grounds.
5) Personal Notes from General Washington .
My newest house was built in 1939.
Some place age means a premium, not a discount.
Others have outlined some of the structural & material problems to look out for in homes that old (plus the "historical" question re: local bylaws). I'd definitely be cautious about buying a home that old, but it really depends on what you plan to do with it (redevelop and flip? rent? clean up & live in?)
Lots of people do it, but it can certainly be more work than a newer home.
My oldest is 1850 and newest is 1937. Lots of craftsmen work. My tenants love them. But get rid of old plumbing and wiring every chance you get.
Originally posted by @Steve Babiak:
Originally posted by @Sam Leon:
I love old homes.
I have a friend in Boston with a house where the basement has a tunnel that leads somewhere, but was "walled off". He thinks it might have been used for smuggling at one time.
The USA had a period in its history where the ugly thing called slavery happened; the tunnel might have been for the use of slaves escaping to freedom in the northern states.
One thing not yet mentioned is historic districts. It can be a pain to maintain the property's appearance to historic standards, and it is almost always way more expensive. And there will be some historic committee that will have to approve everything being done in the historic district; that translates into delays and denials for the permits. So check whether the property is in such a historic district, and if it is understand what the historic committee will expect.
Originally posted by @Roy N.:
Originally posted by @Sam Leon:I love old homes.
I have a friend in Boston with a house where the basement has a tunnel that leads somewhere, but was "walled off". He thinks it might have been used for smuggling at one time.
No idea what it was. I asked him why not remove a few bricks just to see what's beyond and he didn't want to.
I heard about in New York City some properties on Riverside Drive with secret tunnels in basements that lead to the Hudson River.
I wonder if anyone ever bought a very old home and after owning it for a while discovered a swinging bookcase or a pivoted wall which opens to another bedroom or a staircase to a secret chamber?
1900s isn't that old for a multi-family in a lot of neighborhoods.
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In my market (Pittsburgh) most of the houses were built pre 1950, there for we deal with old all the time.
As long as the guts are good then you are fine to jump on it look at the foundation:
This is a mortar crack and if they are not misplaced then you should good to repair but you will want to ask a home inspector or contractor.
When the crack goes through the blocks it normally is a sign of much more stress on the house and you might need wall anchors or even worse to replace it these options are much more expensive.
If the house is REALLY old you might run into sand stone basements:
Sand stone is much harder to tell but they also tend to be very sturdy, you also can put a cement coat over them for lasting protection too.. We see a ton of this in Pittsburgh.
Other then that if the roof looks good and the numbers line up go for it, all my properties are older the newest is 1942 and the oldest is 1907.
Make sure you get a home inspection and make sure the home inspector has insurance, if he says you got structural issues then walk.
Forgot to mention if your market has snow and rain look out for bows (curve) in the foundation too those will normally need anchors and can be costly.
We just completed a rehab on a house built in 1870, make sure you know ARV, have a large cushion for overages/unexpected expenses, and that your profit will be worth the extra time invested. I will post about it later in successes.