Is a 50 year old property too old?

Rental Property Investor · Los Angeles, CA · Member since 2017 · 19 posts · 7 votes

I've seen the rule of thumb that you shouldn't buy a property older than 30 years for value-add multi families. In some markets (like Cincinnati) the up-and-coming areas consist of properties that can be much older; between 50-100 years old. Also, for my budget I'm finding that most of my opportunities are between 50-75 years old. Mind you, I'm just searching MLS sites.

If a property is in solid shape and needs mostly cosmetic or other basic improvements but was built in, say, the 1950's, is the age a deal breaker?

Am I seeing mostly older properties because the younger properties are mostly off market?

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Mack BensonPro Member

Rental Property Investor · Woodbury, MN · Member since 2018 · 299 posts · 299 votes

Age isn't the end all be all but it is something to consider. Minneapolis and St. Paul have a number of solid brownstones built in the late 1800s through the mid 1900s and many of them have gone through extensive rehabs over the years. If you are looking pre 1960s you will likely want to perform a more thorough physical due diligence paying close attention to the electrical and plumbing. While looking at the plumbing I think you should get the sewer lines scoped so you know if there is any existing damage or failures.

I'm not familiar with your market but in mine you won't find much on the MLS. Just about anything over about 7 units is going to be listed by a multifamily broker and only available through their website or an e-mail from the listing broker.

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Kris L.
San Antonio, TX · Member since 2019 · 930 posts · 836 votes
6y
@Adam Kruze
Not sure where 50 years is coming from.
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Rental Property Investor · Los Angeles, CA · Member since 2017 · 19 posts · 7 votes
6y
Originally posted by @Kris L.:
@Adam Kruze
Not sure where 50 years is coming from.

Properties older than 30 years. Several investors make mention of not looking at properties older than this due to some of the issues that can come along with properties of that age. Kris, do you take this in to consideration when looking at deals?
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Grace Navera
Cincinnati, OH · Member since 2020 · 32 posts · 7 votes
6y
I’m no expert to Cincinnati real estate but as a Cincy local I will just comment that most of the buildings in Cincinnati-proper are older. The city was founded in 1788 and was a major city for the region in the 1800’s. I doubt there are very many affordable buildings with in the city limits that are newer...
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Mack BensonPro Member
Rental Property Investor · Woodbury, MN · Member since 2018 · 299 posts · 299 votes
6y
Age isn't the end all be all but it is something to consider. Minneapolis and St. Paul have a number of solid brownstones built in the late 1800s through the mid 1900s and many of them have gone through extensive rehabs over the years. If you are looking pre 1960s you will likely want to perform a more thorough physical due diligence paying close attention to the electrical and plumbing. While looking at the plumbing I think you should get the sewer lines scoped so you know if there is any existing damage or failures.
I'm not familiar with your market but in mine you won't find much on the MLS. Just about anything over about 7 units is going to be listed by a multifamily broker and only available through their website or an e-mail from the listing broker.
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Todd Powell
Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
6y
@Adam Kruze I have owned to campus close triplexes built in 1900 and served me well until I sold and made $200k plus and also had cash flow for years. I have also flipped 1900, 1915, 1920 houses so it can be done. I tend to agree that older than 60’s always check foundations as they can be faulty. You can make money on anything IF the price and numbers make sense. Lastly, I still own 1914 campus 4 plex since 2008. It has shot up from $228 to $459k last appraisal.
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Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
6y
Age goes hand-in-hand with upkeep. I don't exclude based on age because where I am, there would be no houses to buy. I am renovating an 1892 house now and we did foundation work on it. The upkeep was average because it was a rental for a long time, but there's also a reason why old houses are still standing and some new construction blows away in a storm. I wouldn't exclude based on age, but it takes renovation experience to do well on an older house that needs a lot of work.
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Kris L.
San Antonio, TX · Member since 2019 · 930 posts · 836 votes
6y
@Adam Kruze
In Florida things are maybe a bit different. A lot of houses around here were built like tanks in the 60s and 70s. Reinforced cinder block construction holds up better than the wood frame that was more common here before the 50s, after the 70s in a hurricane. As such, 60 year old houses aren’t a turn off.
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Rental Property Investor · Los Angeles, CA · Member since 2017 · 19 posts · 7 votes
6y
@Grace Navera I forgot the city was that old! Excellent point. I saw a beautiful duplex in OTR recently that was built in 1890 that I wouldn't mind having in my portfolio.
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Rental Property Investor · Los Angeles, CA · Member since 2017 · 19 posts · 7 votes
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@Mack Benson sage advice regarding the extra due diligence. And thanks for educating me on MLS. Looks like I need to figure out my market and find a broker.
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Rental Property Investor · Los Angeles, CA · Member since 2017 · 19 posts · 7 votes
6y
@Todd Powell thanks for sharing your experience with older properties. This gives me more confidence, but I'll definitely do a bit more due diligence on older properties.
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Rental Property Investor · Los Angeles, CA · Member since 2017 · 19 posts · 7 votes
6y
@Jonathan Greene thanks for the input! Good point on finding someone with experience renovating older buildings. You definitely don't want a contractor learning on the job.
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Rental Property Investor · Los Angeles, CA · Member since 2017 · 19 posts · 7 votes
6y
@Kris L. That makes sense. Thanks, Kris!
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Eric Burns
Investor · Cincinnati, OH · Member since 2020 · 25 posts · 14 votes
6y
@Grace Navera. Totally agree. I operate in Cincinnati, and I am forced to evaluate condition for that reason. In areas of interest I rarely find a property that is not nearly 100 years old!
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Ian WalshBusiness Member
Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
6y
Half of my market is 50+
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Kyle McCorkel
Rental Property Investor · Hummelstown, PA · Member since 2015 · 638 posts · 653 votes
6y
I’m with @Ian Walsh
I'd love to only buy places built in 1990 but that's just not where the opportunities are. I've found flips built in the 1950's - 1960's with solid foundations (and have never been updated inside) make the best money. About 80% of my rental portfolio was built 75+ years ago. I do a lot of BRRRR's and just make sure to update all major mechanicals and fix structural issues before throwing a tenant in there.
We are flipping a house that’s probably 100 years old and practically rebuilding the whole thing. But we will still make a lot of money on it. It’s all about the numbers.
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Frank Hinck
Rental Property Investor · Minneapolis, MN · Member since 2020 · 540 posts · 285 votes
6y
@Adam Kruze
50-100 year old homes are common in most cities, in NY and Boston you won’t find anything under that! Same with Chi and MPLS. If you plan on buying one get a foundation inspection along with Mech Elec Plumb Roofing. If it’s good structurally and you make sure MEPR are good then it’s just as good as a 30 year old house.
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Jeff Small
Investor · Sewell, NJ · Member since 2016 · 68 posts · 48 votes
6y
@Adam Kruze I totally agree newer is usually better as a general rule. I had a house in Cape May New Jersey it was built during the Civil War. Very solid rental for me during the 19 years I earned it. I have a twin home but Hass to be 150 years old. I have had it for many many years and it is always rented. Just do the basics, due diligence but a little more due to the age of the property. In my humble opinion if you buy it right age does not matter.
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Anthony Vicino
Investor · Minneapolis, MN · Member since 2017 · 95 posts · 130 votes
6y
Rules of thumb are often over-generalized, though they can serve as good launching off points.

Age is an important variable in a value-add deal, but there is no hard and fast "buildings over this age are trouble" rule. It's all contextual to your market, your investment appetite, and your business plan.

Here are a few keys things to consider:

Your Market: As @Mack Benson pointed out, up here in St Paul/MPLS, most of our small multifamilies (2-5 units) were built nearly a century ago. The market has an expectation of "older", therefore it's not a problem renting these properties out. In a newer city, this might not fly. (Cincinnati is an old city and I'm guessing the market has similar expectations).
The Building: Many old buildings are structurally sound. Some, not so much. Just beware that no matter how well built the building, older generally means more cap-ex. Plumbing, electrical, mechanicals...these these wear out and can be pricey to replace. If the downstream increased revenue/decreased expenses justify the upgrades, great. If not, no bueno.
Your Plan: What's your gameplan? Are you looking for a turnkey asset that generates cash preserving yield or are you looking for some decent appreciation coupled with cashflow? Are you outsourcing management or handling it yourself? What's your exit strategy? How you answer these questions (and more), will ultimately determine whether or not an older building works with your strategy. It certainly can, but as with most things in life, it depends.
Also, as already pointed out, the MLS isn't going to be a great place to find multifamily properties over 10+ units. What size properties are you looking at?
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Michael Swan
Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
6y
Old properties, old issues. Have plenty of reserves to weather the storm. Property inspection key!!!
Swanny
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Dell J.
Member since 2010 · 210 posts · 158 votes
6y
I dont believe in blanket rules. Take it case by case. I own a house that was built in 1900. No significant issues. Whats the location? In the rust belt you may find older homes. The condition of the property is more important to me than its age.
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Joe R.
Developer · Chicago · Member since 2019 · 16 posts · 4 votes
6y
@Dell J. - agreed. There is no blanket rule that can apply to this. Get the proper inspections done to decide to determine whether the property has any major issues that are not fixable. Take a GC or subs with you to also provide you an opinion.
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Randy Gutierrez
Investor · NY · Member since 2019 · 171 posts · 80 votes
6y
Homes in PA are so old they just default to 100 years. I would say there is a correlation between the age of the home and upkeep but nothing that should ultimately deter you, especially if you plan on flipping or rehabbing from the beginning.
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Andrew Zai
Contractor · McKinney, TX · Member since 2019 · 6 posts · 5 votes
6y
Anything over 5 years is going to have small ticket plumbing issues begin to appear. For anything over 30 years, make sure you camera the sewer pipes, especially if they are cast iron or clay, as they are liable to collapse. These repairs are $5k+
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Rebecca Glanz
Realtor · Utica, NY · Member since 2020 · 2 posts · 0 votes
6y
In upstate NY newer houses have Significantly higher taxes. For example, the house I’m currently living in burned to the foundation before I bought it. Originally built in 1954, taxes are about 4K/ year (since they kept the original foundation, it’s still taxed as a 1954 house, not a new build). Even with the fire, my foundation is solid. My sisters house a few neighborhoods over, built in the 80s, taxes are 10k/ year and her foundation is crumbling d/t water issues. Just something else to think about in case taxes are like that elsewhere... I’d rather put money in my house than big brothers pocket.
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Joe SplitrockPro Member
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Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
6y
I built a new home in 2008 and you would be amazed all the things that have broken and need repair in that short period of time. That being said, I have have owned properties that are over a hundred years old and even with rehab, there are more problems in older homes.
I recently put a 1949 house under contract. The insurance company told me if a property is pre-1960 they need to inspect the plumbing and electrical. They basically want to know it has been updated.
Most of my properties are newer than 1978, which eliminates issues of lead paint or asbestos. I also find properties that age have circuit breakers and PVC or ABS drain pipes.
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