Hello friends! I'm new to real estate investing and this is my first post :) Like many of you, I got inspired after reading Rich Dad Poor Dad and then started reading real estate books recently and I'm ready to make a move now yay! I just started looking for my first deal where I plan to live with my husband first, and then rent it out after a year or so.
I live in Northampton, MA and there are not many available listings currently. But I came across a cute house that's built in 1830 (almost 200 years old!) Well, I personally love antiques but from Brandon's book, I also learned that old homes are usually more costly and risky (e.g., more repairs, high utility bills since it's not energy efficient, some unforeseen problems). There are also many other potential pitfalls that I saw on YouTube videos. As a newbie, I'm not sure whether it's too risky to buy such an old house as my very first property (but people also learn a lot from the mistakes in their first deal so maybe it's fine? lol). Anyway, just wondering what's your thoughts on this and what are some factors I should consider in this particular case to make my final decision?
Thank you very much! I really appreciate some guidance to help me join this exciting journey with you all :)
I am very wary of anything older than 60 years let alone almost 200! What kind of house is is? I will say if it has a ton of character or history I do believe embracing that character and history and turning it into an short term rental could be a good idea. My last short term renter is in Maine now and is sending me pictures of the cool 200 year old cottage he is staying in. Defintely can be a competitive advantage if done right.
I agree that an older home could be riskier depending on its current state. If its major systems (electrical, plumbing, HVAC, etc.) haven't been brought up to modern standards, you could run into a lot of major headaches.
My advice would be to not run from it just because it's old. If you can get a good deal on it and have plenty of margin for if issues come up, then go for it. And when problems arise (and they will), just remember that you budgeted for them and use the process to learn something versus panicking. On the contrary, I would not move forward with it if you can only get it for a price that will require a shoestring budget. That is a recipe for lots of stress.
People from outside of New England don't understand that the vast majority our housing stock is very old. You don't get to be picky and only look at homes built newer than 1960 like you can in other regions.
Ony of my duplexes was built in 1825 and suffers from all the issues you mentioned. Poor insulation, deferred maintenance, etc. When I bought it the roof had a leak covered with a tarp for the last 5 years. The numbers work out nicely, though, because I bought it at a good price and factored in repairs when running my numbers. It has been a lot of work, though.
My advice would be don't run into it blindly but don't run away from it either. Have someone in your corner that has a lot of experience inspecting/working on old homes from a construction standpoint. This doesn't mean just someone that has good reviews on Google, you'll have to ask around in your network or attend meetups and find someone really familiar with old homes.
Typically with homes that old someone along the way has updated certain systems. You'll need to know what was updated and when. That house literally predates electricity being common in homes by almost 100 years. Did they update the electrical beyond knob and tube? Is the sewer line clay? Cast iron? What shape are the sill plates in? What's the heating system like?
If you're lucky someone has already updated these things ahead of you. All of my wiring was redone in the 90s, and most of my plumbing was converted to PVC and copper at some point as well. Don't cheap out on the inspection stage for a property you're really serious about. I had an inspector, a separate sewer line inspection, a structural engineer, and a contractor all looking at the house. Negotiate for a longer than usual inspection period. I've had my fair share of issues with this house, but so far they were all things I knew would probably come up based on those inspections.
Lastly, I would caution anyone getting into an older home that isn't handy at all or willing to learn. Death by a thousand paper cuts is very real if you have to hire out every little leaky faucet, rubbing door frame, or running toilet. None of those things are terribly hard to fix nor are they expensive but it could become expensive if you always have to call someone out. Of course, this may be a non-issue depending on the deal.
Run your numbers conservatively to account for maintenence and repair costs.
@Yixue Zhao I agree that the “avoid old homes” thing is an outside the Northeast mentality. The homes built up here are often very sturdy. I have a duplex that was built in 1885 and have owned for about 15 years now. I’ve switched to vinyl siding (adding insulation), removed a sinking garage, and replaced the fence. They found some old knob and tube wiring in the walls that cost me $2700 to fix and I’ve replaced a boiler. All in all pretty reasonable for 15 years and the age. I like old houses because often the workmanship is very solid.
I’m in WNY, our major city Buffalo, was mainly built in the 1800s also early 1900s.
Very solid homes built better than most new homes it seems. I make sure to insure the main sewer drain through my property insurance because it’s cheap vs paying out of pocket when it needs to be fixed.
I’m very handy so I’m not worried about many things, I’ll agree electrical could be something to worry about since it could be knob and tube, and it’s buried behind walls.
My most recent purchase just this week is a 3plex, and it appears to have bx wiring throughout which is code for commercial properties around here, I don’t think there’s much knob and tube left active in the building.
Would you rely solely on others for completing work on the property? Or do either you or your husband have some expertise in construction/maintenance? If the former, I would tread lightly.
I’ve done several old homes and I think it costs just about double what the same work would cost on a home less than 50 years old. The biggest time suck that I have found is the non dimensional lumber, no standard stud spacing and out plumb walls and floors.
@Yixue Zhao stay away from them…200 years old. No thanks !
You better have a great inspector and a lot of extra money standing by.... I've worked on old houses and the costs can add up real quick!
But old houses are fun, my favorites!
I toured the house and this one actually has some issues that I don't feel very comfortable tackling since this would be my very first property. The floor is sloping (sinking down in the middle of the house) and you can see a big gap around the door. I'm not a fan of the structure as well and converting it will need some extra money and time than I originally planned. Will keep looking! And indeed, many houses in New England area are old and now I'm not afraid! Just need to see if I'm willing to deal with the issues and whether the numbers would work after factoring in the repairs.