Hello all, im curious to see what your thoughts on the age of a property are. I am currently evaluating a new market for me and have come across many properties in the 15-40k range, however they are dated in the early to mid 1900s. Are these properties people generally stay away from? Or do you go into it knowing a rehab is in order? Do people buy these, renovate them accordingly and have them operating like it is a younger property?
Hi @Michael Czepil - the rental properties I own were all built between 1890 - 1920 and they needed moderate rehabbing when I bought them (nothing major, because the prior owners did a halfway decent job of keeping them in good order).
I can understand why the age would scare some buyers away, but if you look at the numbers (income, expenses, ROI, etc.), these properties can be awesome performers. The ones I own have low vacancy, the tenants are just as good (assuming they're screened well upfront) and they cash flow extremely well.
Do older properties have their issues? Of course (e.g. - smaller stairs, not very handicap-accessible, lower ceilings in the basement, electrical service upgrades, etc.), but there is still a huge demand for this kind of rental space in my market.
The thing I always have to remind myself is... just because I wouldn't want to live there, doesn't mean there aren't thousands of other people who would be happy to live there.
It's easy to confuse our own biases for that of the market - which is why it's important to talk with people who understand the market for these kinds of properties (property managers, agents, investors, etc.). When you understand what the actual market data says, you can make much a more educated decision (rather than basing your decisions on the assumptions flying around in your head).
The majority of my portfolio is pre 1930.
The home I live in is 1924.
Thanks for the reply Seth, I apprecicate your input. It definitely looks like they can be good performers on paper, I would just need to do all my due dilligence to make sure the property is in good enough shape to at least move forward. Thanks again.
That's good to know James thanks for that. Did you go in knowing you had to complete a rehab on the properties?
I think it will depend on where you are in the country. Here in the southwest, there are hardly any properties that old.
Might also depend on the size of the property. A 3+ story building built 100 years ago is likely to come down in a decent-sized earthquake over here, unless it's retrofitted. Even a single story unreinforced masonry building could come down if it's not retrofitted. Of course, this only applies in earthquake country.
We own our house and a triplex here in OC that were built in the 1960s, and 2 fourplexes in AZ built in the 1970s, and their age has already given us enough grief! Cast iron sewer lines, galvanized plumbing (in the OC properties), single-pane windows, etc. And if you want to replace/fix things, you often have to deal with all that lead-based paint and/or asbestos BS. I'm getting to the point where I don't think I want anything built before the early 1980s. Part of that is because we're looking to invest out of our area, so I want fewer maintenance issues to deal with (we're looking for more buy-and-hold stuff).
In many inner city neighborhoods, it may be hard to find newer homes. In my experience, older homes (pre-1930's) tend to be very well built and with higher grade materials. That is not to say that there are concerns. Make sure that you check for the obvious such as the current electrical and heating system as well as the type of plumbing pipes and the foundation. There is a definate demand for this type of housing - especially if updated.
Thanks @Kimberly T. and @Simon Campbell. Seems like market and location has an influence on where these types of properties become profitable. Appreciate all the feedback
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing