Can someone advice on when you buy 2-4 units investment property, how old it should be? A General criteria to follow?
I owned these types of properties, where it was built in 1939, 1950, and another in the 1950's. Having owned them, I been told to avoid properties over 25 years.
The ones I had, previous owners had not updated either electric and plumbing. In the case of the 1939 building, I had small leaks occurring inside walls, which after plumbing repairs, require repairs of walls or ceilings, If I get someone to repair the walls, it's a minimum charge of $300 for each job or I have to take a day or two off from my programming job to fix. Finally I had these leaks occurring with such regularity that my plumber recommended replacing all the pipes in the walls. My plumber whom I used for over 20 years at the time said he noticed such problems in buildings over 50 years old. At the time, my building was over 65 years old.
Finally, the main water line that ran under the garage to the water meter burst, was running for 2 weeks before I called someone. I used to run by twice a month to check on things, heard running water when everyone was out at work. Good thing I did, many owners don't do that for rentals 30 minutes away. The house was built on a slab, and it caused one side of the furnace room to sink half an inch. Apparently, the leak washed out the soil under the slab.
I chatted with a tenant whose dad is a real estate investor, and he said that's why his dad avoids properties over 25 years old, which ties in with what my plumber advised. You also got lead paint issues, and things that are not up to code, but grandfathered, and must be bought up to code if you do any rehabs. My dad owned a property built in 1890, so I was aware of these issues as a kid.
Some folks will tell you it's not a big issue, they own hundred year old buildings. But if you're new, looking for a rule of thumb, not knowledgeable on plumbing, electrical, lead paint, zoning issues on old properties, the 25 year rule is a good one.
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