I am new to rental property investing and I do see the age of properties ranging 7- 20. if the condition of the property good, would I be able to process to pursue 20 years old one as well? Plead help me. Thank you.
Yes, 20 years would be OK. When I started RE investing, I bought some properties that was 40 years old, for long term buy and hold, and when I had it for 20 years, had plumbing problems. I had the electrical updated. When I mentioned the problems to one of my tenants, he mentioned that his dad who's a RE investor avoids properties over 25 years for this reason.
Now it was nothing major, just that I would get a complaint about this, when I got it fixed, get a complaint about the next one. Now I own a property built in 1950, that I did a gut rehab, no problems. Did the rehab in 1984, still have it and paid off. Bought a 7 year old duplex I lived in with no problems. My plumber told me that when building get to 55 to 60 years, the original plumbing has to be replaced.
Thank, Frank for the inputs.
I have multiple 100 year old plus houses and some 50s builds. I really like the 50s builds they are logical layouts and the way they are built is still very solid in the midwest. The 100 year old houses aren't bad as long some stuff has been updated. I think each vintage of house has its own quirks. I've seen plenty of 50s houses that were in considerably worse shape structurally than an 1900s. There are also some 1900s houses that Ive walked through that felt like fun houses because if you dropped 100 marbles in each room they'd go every which way.
Hi Kiran, I would personally go with the newer property as long as the numbers make sense. However, I wouldn't be concerned about a 20 year old property as long as it's in good shape.
@Eric Gutierrez I'm curious how your repairs/capex on the older properties compare with the ones built in the 50's? I'm currently looking for my first duplex/triplex and it seems most small multifamilies in Milwaukee were built in the early 1900's or 1950's as well.
@Kiran Kumar A few things to keep in mind. If you buy post-1978 you likely miss all of those lead-based paint, galvanized plumbing, knob-and-tube wiring, asbestos, etc. issues. That's the simple part to think about.
What can be more prudent (and personal) is to have ballpark estimates on when major cap-ex expenses will arrive. Roofs, kitchens, HVACs, etc. don't last forever. If you want to use rental income to send your 15 year old to college you really don't want to be looking at a home with a 25 year old roof. No because it's a "bad investment" but because it's likely just a really suboptimal investment for you.
That said, those projections are really just a guess. But better to take an educated guess than not :)
@Drew Markert For the most part they wind up about the same. The big things roof, hvac, windows, electrcial etc are really on a case by case basis of when they were either last done, or if they have been updated at all. Youre talking 50 years old vs 100 years old so when it comes down to it they are both old. I factor in the age of the components when I'm writing my offers. You can easily see a 100 year old house with a fresh roof, windows & hvac and you can see a 50s house with all of them towards the end of their useful life. Biggest things I'd look at is how is the foundation, what kind of wiring is existing, type of water supply lines etc. You could very well find galvanized supply lines in either and then it really just comes down to how accessible are they to replace.
I definitely shy away from homes older than 1990, for reasons stated above. Also my insurance agent says it's harder for him to get insurance from good companies on old older homes, unless the electrical, roof, and plumbing and have been updated. Newer homes have PVC drain piping instead of rusty iron piping. And, in Florida, the building codes were really tightened up after Hurricane Andrew 1992, so the insurance rates are much higher in the older homes. And, it's nicer and easier to do rehabs in newer homes.
@Eric Gutierrez Very good points, thank you for your input!
@Drew Markert I'd also just keep in mind a house built in 1990 sounds reasonably new and in a lot of aspects (plumbing, electrical, foundation style) it is very new, but a house built in 1990 could still be on the original roof, furnace, ac that if they haven't been replaced are going to be right at the end of their useful life. I think it really just comes down to the individual property and where money has been spent or not spent over the years.
@Kiran Kumar Don't limit your investing strategy to ball park numbers and age of property. Look at each deal for what it is presenting to you and decide on what makes the most sense for your investing strategy. Don't limit yourself my friend.
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