All Forum Posts by: Ben Stout

Owen D. If I may ask, what kind of rate are you looking at these days for loans like that?

MS in International Business/Undergrad in Mandarin Chinese
Translator/Instructor
I mostly work in war zones, but prefer B neighborhoods for real estate.

Rob K That is great information. I will definitely keep all of this in mind when looking at potential purchases in the future. I did a bathroom remodel a while back in a house with lathe and plaster walls and it definitely was an experience.... and a very crumbly one.

These are great points being made about the historic commission and obstacles to renovation. Do you feel the same if there are grants or other opportunities available from the local government? Do you prefer they stay out of your business as much as possible?

Rob K Thanks for the great laugh first thing in the morning picturing someone's mother shaving his back lol. What a visual.

What if the houses already have modern HVAC and heating and vinyl siding? If there is a lot of original wood work and not so much in the way of paint, would you still shun these?

A lot of those houses in the northeast are amazing. I know many of them can be extremely expensive. Do investors rent out historic homes much where you are, or are they mostly owner occupied?

I've been reading posts here on BP for the past few hours where a lot of our members are defending both sides of two very classic RE investor battles:

1.) Good neighborhood or bad? (Low cash flow + hopeful appreciation) or (high cash flow + low/no appreciation)

2.) Old homes or new? (Repairs vs. fewer repairs //impact on the bottom line.)

The question I'd like to ask you all is:

Why not buy historic homes in nice, established neighborhoods?

I'll be honest and make the statement that I have absolutely no idea which markets are going to scream in value over the coming decade. Sometimes it makes me sad to look at old the old neighborhoods in Detroit that were once so coveted.

What I've been doing recently in my investing is to take a closer look at historical homes that have had basic improvements in electric and hvac and other necessary updates without compromising the style of the time period. I have a lot of respect for nice architecture and the feel of many art deco homes. I've noticed that many tenants do too. The way I market these homes appeals to people who appreciate art and something beyond a cookie-cutter row house. My vacancies (only 2 so I can't speak to this being a recurring pattern) are less than a week.

An example is a 1926 historic art deco style home I bought from HUD. The beautiful wood floors, many built-in features of the house, and the open floor plan created a lot of buzz. I had a large number of applicants and got to pick which I wanted.

When the insurance company's inspector came out to the house, he said "This home is so much better built than the houses these days. Looking at it, it's so hard for me to believe it's almost 100 years old."

So what I've found is that these homes can cash flow well, appeal to renters that have a sense of pride in where they live, can be very low priced, are often structurally sound, and also appeal to owner occupants as well (allowing for an exit strategy while still requiring a relatively small amount of capital.)

Have you thought about buying historic, structurally sound homes in established areas that tenants respect and still allow you to easily abide by the 50/2 rule?

Jon Holdman I seem to be running into that a lot lately. People seem to be horrified of problems like these and mold. Also, any time any HVAC unit has been robbed the house seems to take a heck of a lot longer to sell. I assume that's because people can't budget for it and are trying hard to come up with the down payment as it is. FHA will also not loan on the house mentioned above because they estimate that the repairs could be in excess of $5000. Most people seem to just not want the trouble.

One great thing is that all the carpeting and floors have already been ripped out. I won't have to worry about taking up nice tile or something--I plan to fix the plumbing and then will have to put in new wood laminate as it is.

Thanks again to everyone for posting such well thought-out and knowledgeable responses. I really appreciate your taking the time to help and give your insight.

Rob K That is a great idea and one that I hadn't thought of.

Thank you, gentlemen. That helps a lot. I hope it's a leaky faucet as well, but like Jon said, I'm definitely going to budget for a worst case scenario.