Real Estate Investor · San Diego, CA · Member since 2017 · 55 posts · 35 votes
Hi BP!
I’m thinking of putting an offer on a 3-unit that was built in 1920. Besides the obvious higher capex percentage I should keep in reserves, what else should I consider?
Rental Property Investor · Massillon, OH · Member since 2017 · 215 posts · 168 votes
8y
It depends... What are you looking to do with it? Is it rent ready or will it need rehabbed? Are you keeping or flipping? What are the market demands? What is the weather (presuming Ohio... funace and windows are pretty important around here)? ...
If it’s rent ready don’t go looking for extra expenses, unless you want to increase rent range. If the general home inspection tells you many of these things are present from that era it doesn’t mean they need replaced right away, or at all just to meet today’s standards. Most of them will work fine for many more years. Fix what is needed and budget for future expenses as they come up.
Other than CapEx, I would definitely account for higher maintenance and renovation costs. You may have knob and tube electrical wiring, which can be very expensive to replace. Cast iron piping is an expensive repair or replacement too.
Retrofitting old windows and HVAC are more costly too.
I would recommend hiring an experienced property inspector who is familiar with older homes.
Rental Property Investor · Seattle, WA · Member since 2018 · 129 posts · 163 votes
8y
As noted you will want a full inspection done on the following: roof, sewer lines (scoped by a licensed specialist), lead paint check (specialist), test for asbestos if you have popcorn ceilings. Ideally get a general contractor on-site is much better than your standard inspection. Since it’s mostly visual.
Rental Property Investor · Massillon, OH · Member since 2017 · 215 posts · 168 votes
8y
It depends... What are you looking to do with it? Is it rent ready or will it need rehabbed? Are you keeping or flipping? What are the market demands? What is the weather (presuming Ohio... funace and windows are pretty important around here)? ...
If it’s rent ready don’t go looking for extra expenses, unless you want to increase rent range. If the general home inspection tells you many of these things are present from that era it doesn’t mean they need replaced right away, or at all just to meet today’s standards. Most of them will work fine for many more years. Fix what is needed and budget for future expenses as they come up.
Specialist · Strongsville, OH · Member since 2016 · 303 posts · 217 votes
8y
Besides what is mentioned above you need to make sure you get the weather related items are closely inspected. Roof, Windows, Siding, Sump Pumps, and especially the basements! I find that out of state investors from desert areas like Nevada, Cali, Texas, etc have no clue how bad the basement foundation walls in an old house like this can be.
The good news is that a bad basement can be fixed but the repair cost can vary widely from cheap to multiple tens of thousands of dollars so having the right inspector on your team is critical!