What to know about purchasing historical homes

Question

Hey BP community! I thought I would bring this question to all of you to learn from those that have purchased hundred year old homes in the past. I have a friend that wants to sell one of their homes in the historical district of Springfield, OR. It's in a wonderful location and the property is beautiful but I'm worried about underlying issues that could make this deal a nightmare if turned into a rental.

It's a single family house built in 1920. It don't believe anything other than the roof and hot water heater has been updated since the 50's. I'm thinking that the plumbing and electrical would be the two most critical pieces that would need replacing in the near future (and of course appliance upgrades). Other than that, are there restrictions as to how older homes can be renovated? What other considerations should be taken into account when purchasing a 100 year old house?

Thanks for the insight BP community!

Fernando Figueroa · Answer

I have had previous experience rehabbing and building large additions to historic homes. I would not do it again from an investment perspective, as it is a very lengthy process having to deal with the historic department in your city and fighting in public hearings to get your plans approved and your permits going. If you are going to live in it - maybe - but it's just too much work when you can buy a property that is not designated historic. I will add though, that there is always a massive tax incentive in most municipalities when rehabbing or redeveloping historic properties. You can search for "ad-valorem tax exemption historic property" in your city and you should be able to find the information. In my case, they offered to extend the current tax rate for a period of 10 years, meaning if the historic property I was redeveloping paid $12k/year in taxes prior to me renovating and building the addition, they would keep the same rate for the next 10 years. This is crucial if you are adding square footage - and in my case I was adding a lot. If the property appraiser were to tax this property with the new square footage I would have been billed about $45k/yr in taxes instead of $12k so doing the numbers that's about $330k in savings over a 10 year period. Historic properties can be very beautiful and interesting projects, but I think they are more appealing for someone who is going to use them as their own residence to take advantage of the tax benefits or someone who is doing RE as a hobby and is not in a hurry to capitalize their gains.

George W. · Answer

Some areas in my state have historical societies that are run by power hungry people with nothing better to do than decide you cant paint your own house a certain color, use the windows you want or make any major changes to the exterior.

Other than that typical old house stuff to look out for: rotted floor joist, non-exsisting footings, crumbling stone foundations, settling, old plumbing, knob and tube wires, poor insulation.

I'm a plumber and the problem I see with old houses isnt the fact that they're old: it's more so the fact that 20 different people have worked and modified things over the years because they didn't know any better.

Especially old boilers. Sad truth most plumbers in the last 20-30 years know very little about steam and hydronic boiler systems to the point where things are done completely a-backwards.

Sam Shueh · Answer

Check code on historical homes.

Nicholas Lohr · Answer

I bought a historical landmark building, switched some exterior light fixtures, and the preservation people at the building department made me rip them off and replace them. The style of the ones I chose were from the historical period that was prior to the one the building was built in, ha!

I wanted to switch the flooring in one on the units only to find out that I had to not only replace the sub floor but all the joists as well.

I then tried to build a new building at the back of the parcel because the original building only used half the area.  The process took 1 full year of back and forth with the building department, public hearings, and fighting in general before they let me do it.

Just a couple of illustrations of the kinds of things you may run into. I'm not saying to not do the deal because I don't know the numbers but just be ready for things like this.