Old house over 110 years. Is it an issue?

8 Replies

Hi BP family,

I am looking at these old houses converted into Multiplex build over 100 years ago in Cleveland area. They have been rehabbed and renovated, and you know what, they looked pretty nice and not cheap either.

I am pretty green in rental property investment and wondering is it ok to invest in these sort of old buildings and would I be able to hold them for long term cash flow purpose? If I was doing an inspection, with the 40 pages of papers, how could I tell if the property had good BONE? Worth it or not?

Btw, anyone got referral for a investor friendly realtor in Cleveland downtown area or say inner area?

Pretty basic preliminary questions and hope to get educated! And thanks in advance for all of you!

Clarence 

@Clarence Gong  In the Chicago market where I work, I often tell my clients to look for "purpose built" two, three and four units. This is easy in a market that is literally over flowing with these types of buildings. Not every market has them. I would be nervous about properties that were chopped up single families, but sometimes you have to invest in the housing stock that is available in an area. Focus most of your energy on plumbing systems (originally designed for single family), electrical (Is everything to code with enough meters, circuits, etc?) and structural. If all of these things check out, then focus your attention to the functionality of the floor plan. If the floor plans make sense, and the units will attract a good tenant, buy it!

Originally posted by @Clarence Gong :

Hi BP family,

I am looking at these old houses converted into Multiplex build over 100 years ago in Cleveland area. They have been rehabbed and renovated, and you know what, they looked pretty nice and not cheap either.

I am pretty green in rental property investment and wondering is it ok to invest in these sort of old buildings and would I be able to hold them for long term cash flow purpose? If I was doing an inspection, with the 40 pages of papers, how could I tell if the property had good BONE? Worth it or not?

Btw, anyone got referral for a investor friendly realtor in Cleveland downtown area or say inner area?

Pretty basic preliminary questions and hope to get educated! And thanks in advance for all of you!

Clarence 

 Entire housing stock is going to be older. What you want to do is buy the true duplexes. They are much more valuable than the conversions. IE the ones with 2 large front porches that look like this.

Beyond that biggest thing to avoid would be foundation problems. Other than that everything is rather simple. Roof is gonna last you 30 years so see how old it is then do your math from there. Likewise furnaces are going to give you about 30-40 years, hot water tanks about 15 & you want to get a home that's had the electrical updated to breaker panels. No fuses or Fed Pacific panels. 100 amp service is preferred but some of the streets don't have 100 amp easily available at the pole so you may still see some on 60 amp with a 100 amp panel.

Clarence, you don't want to start with an old home.  I live in a historical home...and the maintenance is nothing of the "Home Depot" fix.  Foundation problems are common - and costly.  Very costly.  Older houses continue to shift which cause exterior and interior cracking and floors become uneven.  Changes in soil moisture alone results in nothing good.  Unless you are a contractor/investor or have a deep pocket partner, this isn't a good place to start.  The inspection report will read like a horror novel (mine sure did) and "good bones in houses" age just like ours.  

I thought it would be charming to own an old house with all that character.  I'm so over that. My clients and friends who invested in older properties as rentals find that the maintenance cost and the tenant requests for repairs outstrip any planned projection.

Fun, huh?

I prefer 100+ year old home more because they seem to be built with longer lasting materials. I wouldn't suggest buying rentals in general to anyone that is clueless about repairs because repairs can add significant cost.

@Clarence Gong I've bought older homes as long as they don't look like they're from 1900s. They need to have upgrades done over time (plumbing, electricals, roof changes etc).  If the property is in bad condition or looks neglected, you're going to invest a ton in rehab and upgrades. I also don't prefer century years old single families that are converted into multiple units. I haven't seen good workmanship in a major chunk of these converted homes. 

If you get a detailed inspection done and the inspector has no issues with the property, I personally go ahead and make the purchase. 

At this point you probably want to make sure all the major systems have been replaced recently....electrical, plumbing, sewer, roof, HVAC.   Also what is your exit strategy?   What do the neighborhoods look like.   All nice multis with all occupied lots?   Google street view is a starting point in your data collection.

Thanks very much everyone and valuable comments and I am mainly looking at Detroit Shoreway, Tremont, Ohio City, pretty much the revitalization area and very close to downtown. 

@Clarence Gong There's some very sage advice above...I don't think I can contribute a lot more...I can say that I have a construction background of over 20-years and manage some pretty large renovation projects...we just bought a 150-year old hotel and it's great...settling foundation, original windows and doors, crumbling plaster, a boiler that could power the titanic...active knob-and-tube...radiant heat...

The point is to be well educated and prepared for what you are getting yourself into. Some older properties are perfect, and others will sink your career...plus everything in-between. 

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