Do you typically avoid older (1960-1970) multifamily units?

17 Replies

I was curious if most of you avoid older multi family complexes? How much more work is generally needed to get them up to code? Do you see any issues with insurance companies not wanting to insure it unless all wiring, plumbing, among other things, etc. is replaced? Even if the inside of the units have been updated, how many other headaches do you typically see?

I have a duplex in Cleveland built in 1964. I'd say the only real issue was the electric panels were the screw in fuses. I had them upgraded to breaker panels shortly after I moved in. I thought the city inspection would of caught this and the sellers would be responsible for changing....but that didn't happen.

Besides, most multi-family properties in Cleveland are quite old. I think mine is probably newer than most of what I've seen. Can't really speak for anything outside the Cleveland area though.

Brian

Haven't closed a multifamily yet, but am looking into it, and no, not at all. I think there are great value add opportunities in many markets which were built then or much earlier. It has lots of potential if we know how to improve, maintain and utilize these properties. As long as you have the place well inspected and know what deferred maintenance is involved and what it costs, you have a great chance to succeed. 

I have a 12 unit apartment building in Western wa. built in 1960 it is an amazingly well performing asset. IMO it really is a matter of maintenance-both preventive and remedial. I have zero hesitation about buying another. Just be sure and have it thoroughly inspected regardless of age.

I am not concerned about age of building...it's really all about location and the opportunity for value add and increase the net operating income.

@Andrew Caldieraro

Age is all relative.  up here in Boston and other places in the northeast, 60s and 70s is newer.  We see stuff all the time in 1880-1920ish.  Just need to be careful with inspections.  You shouldn't have to worry about fieldstone foundations or anything like that like we do.  But to answer your question, age alone wouldn't deter me.  If everything else is much newer it could be a problem but all things being equal shouldn't be an issue in and of itself.

Good luck!

Copper/pex and pvc plus modern wiring plus good condition, then age in theory should not be a big concern. But as it gets more and more difficult to get service people (who know what their doing) older(percieved higher maintenance) buildings are going to be taxed in the market with lower values until the demand for trades people is satisfied

Originally posted by @Andrew Caldieraro :
I was curious if most of you avoid older multi family complexes? How much more work is generally needed to get them up to code? Do you see any issues with insurance companies not wanting to insure it unless all wiring, plumbing, among other things, etc. is replaced? Even if the inside of the units have been updated, how many other headaches do you typically see?

 When you buy an older property it's important to note that you are not typically required to bring them up to current codes. They are almost always grandfathered in as they were compliant with building standards when they were constructed.

Originally posted by @Will G. :

Copper/pex and pvc plus modern wiring plus good condition, then age in theory should not be a big concern. But as it gets more and more difficult to get service people (who know what their doing) older(percieved higher maintenance) buildings are going to be taxed in the market with lower values until the demand for trades people is satisfied

 Which is sadly never going to happen. Any factor for anyone getting into real estate to really consider.

I use a 'licensed inspector' that I pay for, one that I know and trust. In WA the prospective buyer of MF makes an offer prior to inspection. I have 'inspection' include rent roll and financials which I inspect thoroughly. Once that process if complete we have a final negotiation and part ways or go under contract. As a buyer I have no problem making an offer with inspection as my only contingency. 

I just walked a triplex built in 1903.  I'm a designer and appreciate character in any home so the age is never an issue.  This property just happened to need a full gut and is already overpriced :(  As far as inspections go, just like any rental or a home you're going to reside in, you'll want to get it inspected so you know what you're up against.  The inspection can also be used to leverage money off so it's best to get it done.  Nobody wants to buy a property un-inspected then learn that the roof, plumbing and electrical need updating.  You could have requested some money off the sale price to get some of that work done or had them fix it for you.  

Well wishes ... Cassandra

It's been mentioned that cities don't generally make you bring anything "up to code" if it was built with permits at the time of construction. I would say that in properties with obsolete technology (thinking knob & tube electrical) it can be very hard to make even incremental improvements without replacing the whole system. Buildings from the 1960s are pretty modern, as far as building systems go, and as long as maintenance has been done and you get an inspection you'll probably be okay. If you were in California I'd warn that buildings from that era fare very poorly in earthquakes unless they have been retrofitted. 

Not a concern.  Have it inspected during your due diligence.  A seller will generally not allow detailed inspections before an offer.   You can bring an inspector during the property tour but most likely will not get access to all systems and units for a detailed inspection report.  All inspections are on your dime.

@Andrew Caldieraro Make contingency on inspection. Base on report,  create your construction estimate. Include costs for asbestos and lead abatement. In addition,  add 20-30% allowance for unforeseen conditions. Inspector isn't going to see everything and who knows the condition of the home.

Base on the home, city may make you keep the historical requirements of the home.