Advice on buying / rehabing an older rental (1900)

9 Replies

Looking at purchasing my 1st rental property and interested in advice from anyone with experience rehabbing older homes. It's a single family 3/4 BR, 2 BA in a hot area of NY's Hudson Valley, built in 1900. Looks good on the outside but inside it's a MAJOR fixer-upper; slanted floors, former tenants evicted and likely trashed the place before they left (it's disgusting). Kitchen/Dining room looks great though and house is located on an amazing, quiet, family friendly block near center of town. Bedrooms are small and no in-room closets (has large-ish hall closets and attic storage however), one of the bedrooms is a walk-through. Looks like damage is mostly cosmetic, house probably has good bones but won't know for sure until after inspection.

Asking price is about 2/3 of what houses like this in good condition go for in this area. I've run it through the BP rental calculator with conservative, medium and liberal scenarios and it looks like the property would cashflow between $450-$1,000 / mo. This house could also be a flip but I have not looked at that scenario in detail.

What are some things about older homes that I should keep in mind when deciding to make an offer? Are there questions I should be asking that I may not be thinking of? My main concern is the rehab, I know I need a good inspection before but don't want to get caught with any major surprises. Also, I'm concerned about the lack of closets in the bedrooms and the walkthrough (will it be hard to rent). I live about 1.5 hours drive south of the property, my schedule is flexible but I won't be able to run up there at the drop of a hat. We do have good friends nearby who are landlords/realtors who have offered to help. 

Any advice would be much appreciated.

Thanks!

Promotion
Sharestates
America's Private Lender
Receive Fix and Flip Funding Approval In As Little As 24 Hours!
Sharestates helps developers and brokers secure funding quickly with the most competitive terms.
Get Funded

Fishkill is good, solid schools.  Beacon was very hot and is now way over priced.  The market has moved further north.  Also, be careful where in Beacon you buy as there are some rougher neighborhoods.

I have a recommendation on a home inspector who typically I use.  The guy is fantastic and knows his stuff.  He'll really take the time to walk you through the property after he inspects it.  PM me if you want his contact info.

Also, you may want to look into a hard money lender to do the rehab.  Are you planning to flip or buy and hold this property?  Ask your RE agent if they know of any HMLs.

Best of luck!

The biggest issues with rehabbing older homes is getting them up to code and making sure you put enough $$$$ in the budget to do that. Once you open a wall and see the wiring is knob and tube you MUST update it to pass inspection. Same with plumbing, etc... As long as you plan for these things you will be ok.

Thanks @Mike Hanneman , that is very helpful. 

@Frank Gucciardo , the property would most likely be to rent and hold or sell in a few years, not to flip unless we needed to get rid of it (no renters etc.). We are looking in Beacon, seems like demand in that town is only going to keep growing, you feel otherwise? Let's discuss. I'll PM you. Would love your inspector rec also. 

Thnaks!

actually now that I think about it, is this a town house/row house? The style of room you are talking about is reminiscent of classic row house; railroad center room, windowless bathrooms (well, they mostly had windows, but it was really only for ventilation through the roof).

If it is, depending on where the doors are sagging will tell you a lot about the condition of the bones of the house.

Hi Dan et al, I'm an architect in Ridgefield CT (just over NYS border) and have done 100s of renovations on older homes (love them!).  1900 is a good year!  Houses are solidly built, have great bones, if you can work around or update the design obsolesence.

The comment the person above made about bringing building up to code is not quite correct. You only have to bring aspects of the building that are being altered up to code, not the entire structure. That said, I recently almost had a closing fall through (and almost lost my EMD!) when my property insurance company suddenly outright rejected coverage because of knob-and-tube wiring and multiple layers of roofing and deteriorated chimney. I finally found an insurer, and was able to close, but I had to remedy those conditions immediately.

Note also that home inspectors will warn you left and right that they are not required to detect building code violations/deficiencies.  I almost at a point where I don't even bother with home inspectors.

Some other common issues with older houses, particularly if you will be renting:  lead paint, asbestos, mold (although I find older houses are leaky enough that, as long as the roof drains well, air movement through the building is good and prevents moisture buildup), steep staircases, narrow hallways.

But you MUST MUST MUST do a walk-through with an experienced contractor (one who specifically has experience renovating older houses/buildings) prior to placing an offer.  He/she will give you a good idea of what you're in for costwise.  Then take that # and multiply by 1.25 and you've probably got a good rehab cost #.  If he/she likes you, they might even be kind enough to talk you out of a bad purchase!

More specifically, it's hard to say without seeing the house.  I'm happy to help you....just PM me.