Buying Old Rental Properties for Cash Flow

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Buying Old Rental Properties for Cash Flow

Peter Lee
Real Estate Investor · Member since 2011 · 56 posts · 9 votes

Hey guys, I was wondering what your take was on this situation.
I'm thinking about buying a few older rental single family homes vs buying a newer home.

Here are the specs.
Older House
Built: 1950 - 1970
Cost: $40k - $50k
Sqft: 900 - 1300sqft, 3 bed
Rental Income: $600 - $800 /month

On a scale of 1 - 10, 5 being middle class type of house, I would say it's like a 3, it's not in a great neighbor, but it's not what you see on TV when you think of the Ghetto, gangs, violence, etc. That would be a 1 on the scale.

Newer House
Built: 1995 - 2000
Cost: $90k - $110k
Sqft: 1000 - 1400sqft, 3 bed
Rental Income: $1000 - $1100/month
On a scale of 1 - 10, 5 being middle class type of house, I would say it's like a 4, maybe 5. It's in a nicer area. These are like starting homes for young families.

What are you're thoughts?
I could buy much more older houses (2x as much), and cash flow is much better.
Do you feel that a home built in 1950 is old? It's concerned old where I live.
Would I have a bunch of issues with it down the road with the older house or 1950 isn't really that old for a house?

Sample pics of older house:
Built 1963

Built: 1969

Sample pics of newer house:
Built: 1994

Built: 2002

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James H.
Investor · Fort Worth, TX · Member since 2011 · 1k+ posts · 450 votes
14y

Regarding the subject of build quality; how many people are wary of buying houses built during 2003 to 2007? They were really tossing these things up. I was involved in residential construction in various capacities at different times throughout this period and was not impressed with what I saw going on behind the sheet rock. From my experience, older houses tend to be built of sturdier construction and better materials. The con with older houses is the mechanical systems and energy efficiency.

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  • Nathan Emmert
    Investor · San Ramon, CA · Member since 2011 · 1k+ posts · 569 votes
    14y
    Originally posted by Tom A.:
    I'm not automatically a big believer in the theory of "old house - high maintenance, newer house - low maintenance".

    Things in a house have a life expectancy. You could have a 2002 house and a 1952 house and the 2002 may need more maintenance in the next ten years than the 1952 house. The older house is already several replacement cycles into things. It could be at the beginning of the replacement cycle for some of the more costly items (roof, HVAC, windows) if the prior owner recently replaced them.

    The 10-year-old house on the other hand may be getting to the point where the HWH needs to be replaced, the exterior needs paint, the fir (cheaper than cedar but not decay-resistant) trim boards are starting to show rot as the caulk cracks, the builder-grade windows are fogged and the skylights are leaking. In the next 10 years you'll be getting close to the end of the expected life of the roof, gas furnace and A/C.

    There's nothing to be scared of in a 50 year-old house. If the original plumbing and electrical systems are there you'll probably want to update to copper or PEX in place of the galvanized and circuit breakers in place of fuses, but if you get your standard 50's brick ranch with plaster walls you can have a solid, low maintenance house.

    I think you really have to look at the individual houses more than their vintage.

    I'm with you... beyond that, the interiors on really old houses tend to have moved towards the classical. They aren't as trendy and therefore don't end up looking "80s" or whatever the new faux pas is 5 or 10 years after you buy it. It's old to start, in 10 years, it will still be old :)

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