How old is too old for rental investments?
Member since 2022 · 2 posts · 0 votes
I’m new to rental property investments. I see some in my area that look to be in decent shape but says the property was built in 1886. What would be reasons to shy away from a property like this? I’m up for the challenge but don’t want to flop on my first go around.
not enough info. could be a great deal or a terrible deal. you just need to factor in all repairs needed.
It depends on the condition of the house and what updates have been done to the structure, electrical, plumbing, etc.
You need yo pay attention to the mechanics and bones, how does framing, electric, foundation, plumbing look? Houses will last forever if they are kept up with.
You need yo pay attention to the mechanics and bones, how does framing, electric, foundation, plumbing look? Houses will last forever if they are kept up with.
@Karl Huther that is old like Victorian era. Most of my city of Portland was built late 1800's through the 1920's. I own a 1910 duplex and a 1920 house. Just sold a duplex that I refurbished built in 1920 or so. To start you have lots of potential issues like asbestos and lead paint, old wiring and plumbing, lack of insulation and inefficient windows to name a few. It is easy to drop a $100k into one or do it slowly over the years which is what I have done. Is the area worth it? If it is a low budget house roofs still cost 10k+ and everything else. Unless seller has invested a boatload I would shy away unless you know what you are doing which it sounds like you don't.
Get a really good inspector. A lot of your run-of-the-mill inspectors are not that good. After that, it's just money. Once you get the place all fixed up, it's (theoretically) just like any other house. But with more charm....
@Karl Huther
I am a contractor here in Maine, we have many old homes here, some older than the one you mentioned. It always boils down to the main part of the home, and what type of soil was it built on.
I have seen 150 year old homes that were in perfect condition and well maintained, these homes usually sat on elevated grounds with good drainage (which limits the movement of the foundation).
When a house is built on flat ground and or where clay is present. And drainage is pour, due to too much soil not enough gravel, in which the foundation cracks- sinks- crumbles, ect.ect.ect and the cost to repair is very expensive.
If you don't have personal experience with this, I would strongly recommend hiring an inspector with good credentials.
The foundation is the first and foremost important thing in buying an old home. Because everything else is going to follow.
What hasnt been mentioned is , location , location , location . A great house in a poor location is a no go for me . And I have bought junk in great areas . Because with some work they are great producers
I've seen houses built in the late 1800's that are built better and look more modern than houses built in the 2000's. No house is too old for a rental property investment. It simply depends on how much time, energy, and commitment you have to invest. If one of those parts of the triangle is missing, then you're in for more headache than it is worth.
@Karl Huther this seems to be one of the more common questions on the forums lately...
The age alone isn't really enough to go off of...we'd need more info to give you any good feedback on this house specifically. For instance, what grade is the house, and what grade is the neighborhood? What type of tenants will it attract, and how easy will it be to find tenants? What types of issues does the house have? Are there LBP and/or asbestos issues that need to be addressed? Does the floorplan need to be re-arranged? etc., etc.
Other than age-specific issues like LBP and asbestos, the things I'd look for on an old house would be much the same as what I'd look for on a newer house--these things would include: signs of water diversion failures (such as rot, peeling paint, masonry damage), settling/structural issues (one of my few "deal breakers"), the type and age of plumbing, HVAC, and electrical, condition of the roof, the condition of the sewer main (scope it), the type and age of windows & doors, a meth test, a radon test, etc. etc.
I have properties from the 1910s, 40s, 50s, 60s, and 2000s, and frankly--the older properties are often my favorites, and some of them are the best-performing properties in my portfolio.
Just being an old house doesn't--in and of itself--make a property "good" or "bad".
In some scenarios, older houses can have big advantages over newer houses.
In my opinion, the idea that “new houses always cost less to maintain than old houses” is one of the biggest misconceptions among inexperienced investors!
A new house might be less to maintain, but there are plenty of scenarios where a new house will cost you WAY more to maintain than an old house. Why? Well, for one, some new building materials and methods are unproven at best, and junk at worst. For instance, many pros are very skeptical that pex will have the service life of copper plumbing. Sure, some modern building methods are far superior to what was used in the past, but lots of building methods used today aren't nearly as robust as in prior generations (ask an experienced GC).
....Additionally, a new house is still in its "growing pains" phase, and a lot of serious problems can emerge in the first few years of ownership--e.g.; foundation/structural settling, improper water diversion systems creating rot, etc. On an old house, those issues have usually been resolved--and if they haven't been resolved, they're often plainly visible (e.g.; big cracks in foundation, signs of water diversion failures, etc.). ...But on a new house, there's often no way to know what lies ahead. I know people who have bought new, beautiful, multi-million dollar, "turn key" luxury homes only to have to deal with major problems in the first few years of ownership.
Obviously, old houses come with their own issues (asbestos, LBP, funky floorplans, and the all time most reprehensible sin against humankind: the carpeted bathroom) …but, if you know how to identify and manage these issues, they’re usually things that can be fixed…plus, there’s the satisfaction of saving a cool old house!
Good luck out there!
There is no specific age at which rental investments are considered "too old." The age of the property you are considering as a rental investment can be a factor to consider, but it is not the only factor. Other factors to consider include the condition of the property, the location and demand for rental properties in the area, and the potential for return on investment.
It is generally a good idea to do a thorough analysis of the potential costs and income from the property to determine whether it is a good investment. This includes considering the potential for repairs and maintenance, as well as the potential for increased rent over time.
Ultimately, the decision to invest in a rental property is a personal one and will depend on your individual financial situation and goals. It is important to carefully consider all factors and seek the advice of a financial professional before making a decision.