I'm looking at a SFR rental property that has no basement. Concrete block foundation with a crawlspace. In this area (NW Iowa) 99% of homes have some sort of basement, whether finished or not. A slab or crawlspace foundation is rare.
This is a B class property in a A class neighborhood. It was built in 1930 and is valued around $100K. Most of the surrounding homes were built around it in the 1990's and are valued $200k+. Will likely rent for $1000/mo. It has been well maintained and was remodeled 2 years ago with medium grade finishings. 1068 sq/ft with a double carport.
This looks like a good property, but the thing is, severe thunderstorms and tornadoes are a real thing around here. Home owners like to have basements, I know I do.
I'm wondering if the lack of a basement could be a problem? Pros, cons?
Ankeny, IA · Member since 2015 · 38 posts · 24 votes
10y
I don't know if I would worry about that aspect of not having a basement. Think of the thousands of people in apartment buildings that don't have a basement to go to. More of a concern for me would be the lack of the added storage an unfinished basement gives to a tenant.
Ankeny, IA · Member since 2015 · 38 posts · 24 votes
10y
I don't know if I would worry about that aspect of not having a basement. Think of the thousands of people in apartment buildings that don't have a basement to go to. More of a concern for me would be the lack of the added storage an unfinished basement gives to a tenant.
Lender · Omaha, NE · Member since 2008 · 1k+ posts · 1k+ votes
10y
There will always be people willing to live in a house with no basement. It's no different than living in an apartment building. I own several slab houses, and have a lot less issues with them than I do with houses which have basements (foundation issues, water intrusion, etc.). You may have more frequent turnover due to people outgrowing the house (less storage, less sft.), and you may have a smaller tenant pool, but they will rent and still provide a good ROI.
Real Estate Agent · Mechanicsburg, PA · Member since 2014 · 529 posts · 217 votes
10y
@Tom V. Like the other posters mentioned, I wouldn't consider a slab to be a deal breaker. I personally have 2 properties w/ slabs that have been very good. However, like @Ryan Weirick mentioned, a real concern would be lack of storage. Both of my tenants have expressed their concern about lack of storage. One got a shed. One last thought, I remember when I purchase the properties, the appraiser subtracted a value of 15k for not having an unfinished basement since all of the other homes in the area had a basement/partial basement.
Thanks for the replies, guys. I appreciate it. I didn't really think there would be any significant drawbacks to not having a basement, but since I'm new to investing I thought I'd ask the forum in case I was missing something obvious. There is an extra room in the house for storage, so that helps.