Hi y'all! I'm looking at buying my first investment property and it seems like a great deal but it was built it 1910. Any advice/recs? What to be very weary of? How to get it properly inspected? What might not be that big a deal? What might NOT be a big deal? I know asbestos, lead paint, electrical, and plumbing should all be checked out. Thx!
There’s a very good chance it has asbestos and 100% chance it has lead paint. Where I am you don’t have to remove, just contain so paints not peeling and asbestos is not loose.
All my properties are older. You may have old knob and tube or not. Aluminum wiring came into play in the 40’s and many houses were upgraded. Don’t expect anything to be plum or expect air tightness. Mostly, remember that whether or not you would live there is irrelevant. Many tenants love the old builds with the woodwork. If it has good plumbing, electrical, roof, and foundation it will be a good purchase.
Right on, thanks for the input Mark! The numbers seem solid so I'm interested in finding out more. In these situations do prospective buyers usually pay for a home inspection before making an offer? Or after? This could potentially be my first investment property/home purchase so any and all advice/info is super appreciated!
Absolutely before. This may cost you $1500 to $2500 but they will tell you everything that they don't like including code violations, old roofs, issues with the foundation, etc.
Don't be surprised if this gem comes out differently than you expected. It's what it is. Everything is negotiable and I have walked away from deals after the inspection because they just didn't make sense.
I'm in NJ rehabbing a 1902 multifamily as a 1st time house hacker. Here you usually get a home inspection and in my case I was buying the house as is but I got one anyway. An investor friend gave me an inspector who finds everything and goes over the place with a fine toothed comb. A few reasons why I paid the $600:
- 1st time investor and I wanted to be sure the place wasn't going to be a complete money pit.
- Good to know what needs to be done ASAP and what can wait a few years or ignore.
- As Mark said asbestos, lead paint and electrical (plus septic if any). In some states you can't sell a house unless they are remediated. Best to let an expert tell you if there are any issues then you can share with the seller and negotiate. You might just get all your money back here.
- Follow the inspector around and ask questions. It's a learning experience on what to look for and where to look.
- Get to see all the rooms and what the tenants are doing in them. I told my tenants to stop doing two questionable electric things like plugging a power strip into another power strip. Also fixed a door that was falling off (10 minutes plus a few screws) and avoided a new door later.
- You will get a complete inspection report with pictures to keep on file. Great for future use to compare what it looked like when you bought it.
Thanks for the words Andy - good luck to you as well!
Hey @Kevin Conness ! These old homes like to scare away a lot of people (More opportunity for us!)but the truth is they are built a lot better than most houses now a days haha and as @Mark H. Porter said don't expect anything to be plumb. I own three properties a 1910 duplex we turned into a triplex, a 1900 duplex, and the newest purchase being a SFH that was built in 1890. I would highly recommend since this is your first purchase that you call some contractors and offer to pay them to come and give you estimates on the property if you don't know what to looking for. An inspector will tell you whats wrong with the property of course but contractors will give you an idea of the work that will need to be done and how serious each issue is.
@Kevin Conness I’d rather buy a house that was built well in 1910 than a house that was built poorly last year. Definitely check the things on your list, plus I would add to look for any water penetration, termites, check the windows and the structural integrity (foundation, floor joists, framing, any bowing walls, sagging floors, dry rot, etc.). A good inspector with experience in older properties will be worth their weight in gold. In my market it’s more customary to have an inspection done once under contract, in fact it’s really uncommon to do one before but you might schedule a showing and have an experienced contractor join you to give their opinion before writing an offer if you’re concerned about the overall condition. I would want the plumbing, electrical, mechanicals, insulation and roof to be updated ideally, or for the price to reflect those big ticket items needing to be done. Items that I like to see original but in good condition are wood trim/custom finishes, windows (really love sagging glass in an old English Boroque style sash window with 6-8 panes, but only if they’re in decent condition and not too rotten to be repaired), fireplaces, custom masonry, claw foot tubs, and even tile/bathroom/kitchen features and fixtures as tenants love that old-timey charm (as long as it’s well-cared for and still functional of course).
Right on, Thanks Steve and Christian! As a newbie I super appreciate all the responses I've been getting.
@Kevin Conness do these all the time. Depends on what you're looking to do with it. If BRRRR, and you want top market rents, you usually need to do higher end finishes. (If a flip - you may have to do it all since an inspector will be checking it all right behind you) if keeping to rent , You can gut it and do it right now so you have little to no future maintenance issues but you're get a lower initial return or you can do the cosmetics and gamble on the long term and take them as they come up. Just know what you're getting, what needs to be done and build that into the cost of acquisition. Foundation, including structural joists / flooring, water damage - most common for this age, termites, sewer, roof, electrical, gutters and mechanicals. Those are your bid ticket items. Find an independent inspector that might has a history of construction experience (semi-retired) and they will be most candid with you vs just playing CYA for liability purposes.
I recently purchased a 6-plex in downtown Sacramento and these are some of the things I've learned to look out for:
- Make sure the foundation is solid; some inspectors don't like to go under the house if the opening is too narrow. Find someone who will check it all out.
- Old houses may not have insulation in-between the walls. You may want to add it, especially if you're paying for the utilities.
- Check if your house is in a historical zone. Even if it's not designated historical, it may be in a zone which limits your ability to change the windows, or require a permit to paint. In my case, the building needed all new windows and some of the windows were illegally replaced with vinyl. The city required us to replace with wood-framed windows which were twice the cost.
- There may be a provision to get lower property taxes on old buildings. Here, it's called the Mills Act.
We own a property that is built in 1910 and it was our first property. It was newly rehabbed when we purchased it. So all the systems were updated. We do actually have a higher repairs and maintenance budget for it. Older homes tend to fall apart so they just eat up more of the profits. If you account for a higher maintenance and repair budget, you will do well.
I wouldnt pay for inspections till after you are under contract, once under contract you can still negotiate repairs , purchase price, whatever, and considering you are already in escrow most sellers dont want to re-list the home, you as a buyer have a number of contingencies at your disposal, I would try to lock it up first then inspect and negotiate accordingly.
good luck :)
@Kevin Conness I have a property built in 1910 as well and bought it turnkey. It had more issues than I anticipated, but my reserves made it manageable. That is why cash-flow is crucial. Make sure you set aside enough in reserves.
I was tying to be positive and encouraging but I wouldn't do a 1910 home for my first deal unless the plumbing, electrical, HVAC, roof, etc had been done in the past 30 years. You open them up and its a whole can of worms. You have inspectors in there digging around. I have done them and said I never would again and now I am doing another one and I am turning gray more rapidly.
@Kevin Conness if it needs foundation repairs or framing repairs underneath, have an experienced contractor do it. As you move or fix one thing below in the foundation or framing, other things start to move...
I’m wrapping up my 3rd century home renovation this week. I’ve bought the last 2 out of state and only buy them sight unseen. I send my agent out to get a look for any foundation issues, I’ll usually get a sewer scope to make sure that’s ok too but I only go in planning to fully gut them. This way if we find out the roof is good or what have you it’s a bonus. There’s always bad electrical, always. Good luck!