How much does "age" of a property matter

5 Replies

Hi everyone,

A question as I enter into mt new exciting REI adventure. - In the REI community, if you find properties built in 1965 through 1970's and Cash on Cash Return is 10%-12% and cash-flow is $200 - $250...how much does build date matter? The context of my question is - the math works good today...but in say 10-12 years if I want to sell the property...will I be able to unload it? or will investors say -"Hmm...that property is too old" - or maybe they say that now - even with these numbers and the thoughts may be "buy something "newer" ...LOL - I don't know, I'm just starting out....any insight from anyone please?

Or maybe I'm missing something in my thought process in its entirety? Any thoughts?

In need of assistance/guidance,

Rob

@Robert Duffer Age of the home can deter some buyers, but it all depends on how well the property has been kept up. From an owner's perspective it can also impact how much you need to be setting aside for Repairs/Maintenance and Capital Expenditures. For example, if your property was built in 1970 and hasn't had a new roof since 1985, well you're probably going to need a new one fairly soon and that bumps up your CapX costs and decreases your cashflow. When you go to sell it, how many large capital expenditures are needed to get the property up to a "good" condition is probably going to impact your sell price, if you've stayed on top of R&M and CapX then you may be able to get more, if you've let stuff go and not fixed or replaced things you may have to sell for less.

I'd say it depends on the average age of comparable assets in your market. A bulk of the stock in my market was built in the 1950's, so we don't blink at anything "old."

@Robert Duffer the effective age of the house is most important. With improvements, the effective age gets younger. Anyway, i think you will be fine. After all, I've bought houses built over 100 years ago without problem and never have a problem unloading them.

Personally I love old houses and have had many built in the 1930's. Oldest one we currently own was built in 49 but we took it to the studs and it has new everything.