Age of apartment building

4 Replies

Hi - Many of the multi-family properties I have been looking at were built in 50s or 60s. Rarely did I see newer properties built after 80s/90s. Do you only buy properties that were built after certain years? I am worried about the high maintenance cost of older building. 

Thanks a lot!

Chase

Chase. 

While the newer build properties are much better in terms of maintenance costs. There can still be some great properties that are built in the 1920's etc. 

Of course your analysis must have a much higher maintenance cost for these properties. 

I wouldn't pass on a great opportunity just because it was built in 60's.

You really need to look at capital expenditures. Maintenence implies the day to day costs are higher, that really depends on the quality, age, structure and previous upkeep. Older buildings what will kill you is underestimaing essential capital expenditures like roof, heating systems etc.

@Chase Gu I like newer buildings but I’ll also pay more for them. So, well, there’s no free lunch. You can’t look for the same ROI for a 1910 build as a 2010 build. Since the vast majority of people on BP have CoC or cap-rate thresholds it will (almost by definition) push them towards older construction. Older construction also allows for a little better shot to BRRRRRRR. If something built in 2010 needs major rehab it might be bad construction or it’s has a really bad owner. Either way, it’s dicier than buying a well maintained complex of the 60s.

If you do buy post-78 you skip all of those LBP, asbestos, etc. issues. You won’t have the issues the galvanized plumbing. Of course, if you’re buying in 2018 a lot of these issues could have been addressed already. So, as with all things, it’s pretty much case-by-case.

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