When buying an older property when to upgrade components

4 Replies

I am looking at a 2 family that poses to have some good potential cash flow.  I seem to be getting hung up on the level of upgrades necessary.  The electrical panel is listed as fuses.  I have to assume the entire electrical system needs to be upgraded or does it?  When would you upgrade an electrical system?  A plumbing system?  I have attached a picture of the property.  The siding is asbestos.  When should that be upgraded?  The rest of the properties on the street are in better overall appearance and condition.  

@Randy Dulac I think the first thing you’ll want to consider is your intention with this property. For example, if you plan on holding and getting a long term tenant in there, then do your major upgrades and repairs now. This can increase your appreciation, cash flow and level of tenant.
Leave as is, and Lilly get a lower rent and possibly upset tenants as things begin to break down after being used for a few weeks.

It depends on the systems already there. If the plumbing is galvanized but in good shape,  I would leave it and just monitor. Replace with Pex when the time comes. Upgrade the fuses to breakers, I assume theres knob and tube as well. You likely won't get a good insurance rate when these in there or insurance at all.

I personally would pass unless the deal is very good as properties that haven't been updated will likely turn into a nightmare unless you do a full gut renovation and bring everything up to code which of course will be expensive. 

This could be a great reposition opportunity if the rest of the street/neighborhood is nicer. Get a good inspector to really identify all of the pressing issue that NEED to be addressed. Additionally, look at the neighborhood to determine what type of exterior/interior renovations need to be done. If it's a good deal then every dollar spent on rehab should have a great return. Good luck!

Safety first, so always do electrical when needed, rotten decks, bad furnaces, and safety hazards. For cosmetics it is about what your market will give you extra rent for. As for intact asbestos siding i would say it is an issue only if brittle. Asbestos pipe coverings may need remediation again if flaking and especially on easily accessible tenant areas.

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