100+ year old houses?

24 Replies

I admit it: I love old houses, especially those built in the early 1900s.

Yet I always hear savvy investor types talking about only investing in post 1990s houses or similar criteria.

I know real estate investing is about, well, investing. But I wonder if anyone has been financially successful while pursuing older homes?

Lead paint always seems to be a huge concern in these homes, as well as fuel efficiency.

Perspectives from old home investors appreciated.

Michael

P.s this is relevant because I'm in contract on a multifamily built in early 1900s with lots of original detail, windows, etc. I know it's going to be a bear to restore and maintain but I can't help myself.

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Hey @Michael H.

All but one of my properties (a duplex built in 1958) were built between 1900 and 1920. I haven't had any issues above and beyond what you would normally expect in rental properties, other than an increased cost to remodel, as Lathe and Plaster can be a pain to remove. Remember that all the main components have either been updated since construction anyway, i.e. roof, furnace, appliances, windows, water heater; or can be replaced just as easily as in a home built in the 1970's/1980's.

@Michael Healy

Solid houses check out the interest free energy loans and rebates.

If your tenants qualify under affordable housing income guidelines they can request an energy audit. If it is determined they would benefit from extra insulation new doors or windows they will do it for free. Check out the local affordable housing office.

Paul

I'm in Massachusetts and just flipped an 1890's Victorian in Dedham for a nice profit, and I'm now working on an 1850's Victorian in Canton.  I too love the old houses and love bringing the 'old ladies' back to their former beauty.  Here's the Zillow link so you can see pictures: http://www.zillow.com/homes/52-reed-street-dedham-...

Yes there's some more work involved like jacking up the house 6", gutting some old lathe and plaster walls down to the studs, removing all the old knob and tube electric, and removing all the radiators, blowing insulation in all the outer walls.  But if the numbers work I'm not afraid to do it.  

However, I'm not familiar with buy and hold.

Let me know if you'd like to talk offline.

@Michael Healy it depends partly on how much updating has been done over the years. Some 1900s homes have been insulated, new windows, new electrical and plumbing, etc. My personal experience is that I owned an 1890s building. It was the most amazing and beautiful building, but it was a money pit. Everything imaginable was wrong with it. It was like a pop-a-mole game. I fixed one problem and another popped up. Everything I purchase now is late 1970's or newer. I still have maintenance and repair but all the homes are built on modern code requirements. 

If I could afford to buy rental properties built after the 1990's I would, but it is not realistic in my market. I own older homes and don't have many issues. We typically rehab them and upgrade to newer standards but the house will always be old. Maintenance is required for older houses and newer ones. I wouldn't let the thought of an older home scare you away. If it nice, it will rent and people will like it.  

Been there in RI.   6 units - 5 from 1860 and one SF well I can only guess the age.

Think  4 major hazards-Lead, asbestos, electric, and fire.

Lead- know your lead laws. In RI wood windows won't pass lead- not sure about MA.  That means you replace or retrofit with removing paint and using liners etc.  The first does not make me happy but had to be done in some instances and the second well it costs a fortune (quoted 1 k /window) so you have to figure what you are going to do. MA is different- I live here but don't know the lead laws.

Asbestos- know where you have it and how to get rid of it if you have to. Around the furnace you may have some and you could have vermiculite insulation with asbestos as well as 8x8 floor tiles, these tiles are fine if undisturbed. 

Electric- plan to put breakers in if you don't have them and look for other poor electric supply. People can usually deal in the main living area but they want the kitchens and baths to have GFI and enough outlets.

Fire -does it meet fire code, in RI 5 units need to have a fire alarm system and of course look at egress but our property the seller had to have the fire alarm inspected.

Heat- if you can convert to gas you are lucky!

Other then that it is the age of the systems and construction. I too love old houses however I always need to keep in mind it is about cash flow so you won't always restore like you would in your own home. Renovate smart- you are buying an investment which should make you some money.

@Michael Healy i have 4 duplexes in Milwaukee all built within the 1920's I have not had any significant problems due to age. There have been surprises with things like old wiring, but only as far as the wiring being junk at the outlet (all have had knob and tube replaced). In my experiences, it seems like with a house that is about 100yrs old, much of the work has already been done with things like heat, electrical, some plumbing. I also think there in many areas there are many houses of that age, so its no surprise to anyone, and enough of the contractors know how to handle those issues. 

I wouldn't let that be the deal breaker. Maybe replacement costs if there are too many over a short period of time, but I wouldn't discriminate on the building based solely on the age!

Good luck!

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Its all I know. Here in Philly and most older northeast cities the housing stock is old. Mine were all built around the 1870s.

I'm an architect/investor in Fairfield County, CT, and I totally feel your love of older homes.  I have to admit, I sort/filter my property listings to 1880-1930.  I have credible professional reasons for this, and here goes:

Pre-1870, buildings are likely not stick-framed, will be framed post-and-beam.  The walls thicknesses will be a disaster when replacing doors and windows.  And nothing will be to code, so if you open up any wall be prepared to open your checkbook to whatever craziness the building inspector is in the mood for that day.

1870-1930 houses are incredibly solidly built.  Nothing present day comes close.  The framing is old-growth wood and structurally is double the density of present-day framing.  Literally double.  The exterior siding, if it is still lurking under the mold-inducing vinyl siding, allows the wall to breathe but at the same time rot-resistant.  The plaster finish on the interiors of walls just about eliminate any sound transmission.

Insulation is an issue, but if you can't insulate in the wall cavity, a layer of rigid foam on the exterior can offer quick payback.  For windows that are historically accurate, nothing beats Marvin.

The most heartbreaking thing that can happen is when an old house is stripped of it's interesting exterior trim and detail.  But it is getting easier and easier to match/copy exterior detailing using stock PVC, which paints nicely and will never rot.  I'm currently checking into a new company Intex which claims to be able to replicates and exterior trim/detail/molding/bracket at a competitive pricepoint.

Michael, or anyone else, don't hesitate to contact me about some ideas to preserve some of the unique and beautiful details of your property.  Good luck!

I dont know the laws in NY, but here in  San Diego,CA, we have a act called the Mills, its tax advantage on older classic home that qualify, you cant change the inside all you want but not the outside, so in Point Loma this area here there is a few so i bought a home with a partner not long ago it was a old classic home, asking price was  $1,185,000 which we taught was high the house was ugly inside i mean ugly i wish i have pictures still and most people saw the historical designation and were turn off thinking they couldn't do anything but know i studied my Real estate california books so i dig into and took a risk and waited, for about 3 months the property was reduced to $1,050,000 or so, after multiple counter offers and lots of talking we got the property at $890,000. we put all this beautiful classic stuff into it about $350,000, so we were into it for $1,240,000 which people taught we were crazy but the house was perfect we were allowed to paint the exterior, its original 1901 color, and fix the yard and make a car port but not a garage, so after almost 7 months, we put it on the market and in about 35 days a buyer came and we got $1,800,000 which were very happy with. so yes there is possibilities 

Wow! Really glad to see so many old home lovers out there. I grew up in a 1904 house and never wanted to go visit my friends who lived in the new "subdivision" ("what the heck is that, anyway?") on the other side of town, because, as I said to one friend, "your house feels like it's made out of paper mache and balsa wood." (I'm less mean these days, but I still set my search filters at 1945 and earlier.)

My taste came back to haunt me today, though, when a realtor said my 1941 art deco condo wouldn't sell for as much as I'd like because "the bathroom and kitchen aren't updated." I said to him, "now, see, I consider that a feature!" I guess it's lonely in the depression.

@Renee Tepper  --it came out beautifully! I hope someday to be able to tackle such a project.

@Colleen F. --thanks, the lead is what concerns me the most, but i'll be reluctant to replace these beautiful old windows.  Fortunately the electric is mostly up to date except for a GFCI that may need to be put in here or there. Converting and submetering the heat is my biggest bucket list item, which should free up cash for other things.

@Paul Timmins --I'm planning to look into an energy audit to see what can be done to make the property more efficient. 

I know mixing passion with investing may dampen long term success, but fortunately the charm is well intact and hasn't been erased by oblivious renovation.

I should add that there was nothing grand about our 1904 house and I was a free lunch program at school and latch key kid, so when I made those remarks about my friends house in the "rich" part of town, I was genuinely puzzled why such a fancy new house would feel so insubstantial.

Originally posted by @Renee Tepper :

I'm in Massachusetts and just flipped an 1890's Victorian in Dedham for a nice profit, and I'm now working on an 1850's Victorian in Canton.  I too love the old houses and love bringing the 'old ladies' back to their former beauty.  Here's the Zillow link so you can see pictures: http://www.zillow.com/homes/52-reed-street-dedham-...

Yes there's some more work involved like jacking up the house 6", gutting some old lathe and plaster walls down to the studs, removing all the old knob and tube electric, and removing all the radiators, blowing insulation in all the outer walls.  But if the numbers work I'm not afraid to do it.  

However, I'm not familiar with buy and hold.

Let me know if you'd like to talk offline.

 I'm super jealous. The oldest things I ever get to lend on are from the 1880s. Love the Victorians. I wish we had 1850s stuff in my area!

Originally posted by @Elizabeth Zieman :

I'm an architect/investor in Fairfield County, CT, and I totally feel your love of older homes.  I have to admit, I sort/filter my property listings to 1880-1930.  I have credible professional reasons for this, and here goes:

Pre-1870, buildings are likely not stick-framed, will be framed post-and-beam.  The walls thicknesses will be a disaster when replacing doors and windows.  And nothing will be to code, so if you open up any wall be prepared to open your checkbook to whatever craziness the building inspector is in the mood for that day.

1870-1930 houses are incredibly solidly built.  Nothing present day comes close.  The framing is old-growth wood and structurally is double the density of present-day framing.  Literally double.  The exterior siding, if it is still lurking under the mold-inducing vinyl siding, allows the wall to breathe but at the same time rot-resistant.  The plaster finish on the interiors of walls just about eliminate any sound transmission.

Insulation is an issue, but if you can't insulate in the wall cavity, a layer of rigid foam on the exterior can offer quick payback.  For windows that are historically accurate, nothing beats Marvin.

The most heartbreaking thing that can happen is when an old house is stripped of it's interesting exterior trim and detail.  But it is getting easier and easier to match/copy exterior detailing using stock PVC, which paints nicely and will never rot.  I'm currently checking into a new company Intex which claims to be able to replicates and exterior trim/detail/molding/bracket at a competitive pricepoint.

Michael, or anyone else, don't hesitate to contact me about some ideas to preserve some of the unique and beautiful details of your property.  Good luck!

 I've got something to share with you from the West Coast that you might be able to appreciate, given that you like 1870-1930 homes. 

Rehab Done Right: City of Oakland Planning Department, June 1978.

@Michael Healy

If you are going to upgrade the efficiency of the home I would recommend looking into utility rebates available for multi-family upgrades.  Many states have a well-publicized efficiency rebate program for single family dwellings (in California we have Energy Upgrade California).  Not as well known are the multi-family rebates available (again in California we have the Multi Family Upgrade Program).   I have done efficiency upgrades on multi-family properties where 30-60% of the project was subsidized by the rebate program.  To get the rebate in CA, you have to achieve a minimum of 10% modeled energy savings, and the more efficiency measures you add the higher the rebate.  It's based on the estimated efficiency of the project, so there is definitely a loading order (insulate the shell first, then look at your mechanical systems)  The difficulty is that there is almost always a waiting list because the programs are oversubscribed.  That said, if you submit your property with a clearly defined scope and follow up with the program admin folks, you may have a chance of getting in with a little persistence.  

For folks who are buying SFDs (1-4plexs) these qualify under the single family programs and there is plenty of funding in most states with a rebate program.   As a contractor I've done hundreds of home efficiency upgrades with rebates.  As an investor, if done several of my own properties.  Here is one example of how the costs and rebate of the efficiency upgrades panned out:

1450 square foot house in Berkeley, CA. Single story, nothing fancy:

  1. Attic Insulation: $1600
  2. Wall Insulation (drill and fill - didn't open up the walls): $3000
  3. Remove Asbestos ducts: $1250
  4. New high efficiency furnace and ducts: $9,000
  5. New high efficiency tankless water heater: $4500
  6. With permits the total cost came to $20k
  7. We got a $5,200 rebate check in the mail 6 weeks later from PG&E

If you want to find out what rebates are available for efficiency and solar in your state check out this site: Database of State Incentives for Renewables and Efficiency

I own a home from 1919 and as far as I'm concerned it's extremely well built. The only thing that is a pain is lathe and plaster walls. Repairing them yourself is incredibly difficult and won't look perfect when repaired yourself. I'm pretty handy and have done tons of repairs myself, but plaster is something I have difficulty with. Another thing that's a pain is when you're doing repairs to moulding, door frames, etc, it seems like the plaster loves to start pulling away from the wall everywhere.

Professional plasterers are pretty expensive.

Early 20th century homes look great, and command a price premium because of their character.