Newer or older homes Houston Texas?

Question

I made the decision to buy newer homes (less than 7 years old).

I see most investors in Houston buying 20 to 30 years old houses, fixing them a bit and get better CF than on newer homes but will they not be eaten up by maintenance cost?

OK, taxes are a bit higher on newer homes but my feeling is that I have a good 15 years without a pb ahead of me.

So less than 10 years old or more than 20, what is your choice?

Sharon Tzib · Answer

Hi Francois. I think it may depend where one is at in relation to their age and investing arc (at, near, or far from retirement). I know that when I get close to retirement, I would much more prefer a newer home/asset, for the reasons you gave, but also, because of location. My fear with the older neighborhoods is that even if you buy a totally rehabbed house, which could have lower capex, will the area remain in favor with tenants, or will it start declining, etc.?

If you do buy new, you must make sure it cash flows still, which as you say, can be harder with the higher price point. And maintenance won't go away totally, even in a new house. BTW, what does "pb" mean?

Eric Tait · Answer

I buy for equity and cash flow, so I can get the best deals on older homes, I try to buy them built after 1978 (lead paint issues). But we have bought older homes for our Funds.

We rehab our property to a level where maintenance is not really an issue, and we replace anything that has less than a 5 year useful life history left on it. So our maintenance is not much of an issue. Also we have a repair deductible for our tenants and it is explained to them prior to them signing a lease.