4 things to consider when choosing older housing stock

  • Older homes mean older systems and windows, and they often aren't insulated as well.
  • Laws about renovations on older homes vary by city and state.
  • Trying to do a quick flip can be difficult if surrounding homes aren't as well-loved.

Yesterday, I talked about the benefits of older homes in “5 reasons smart investors choose older housing stock.”

Indeed, unique touches like claw-foot tubs and crown molding combined with older homes’ proximity to urban centers make them great investments in many ways. But special considerations come into play when deciding where and what to buy, including:

1. Dated components

The older the home, the older the windows, plumbing and electric. When you start renovations on a historic property, you should view these fundamental features in an entirely different light than you would a home built in the past 15 or 20 years.

Old homes are often not insulated as well as modern properties, and poorly maintained heating and plumbing systems might require a lot of work.

When shopping for a historic property to invest in, be aware of issues surrounding electrical safety in particular, as older fuse systems might require a full electrical replacement throughout the home to be up to code — which can become outlandishly expensive quickly.

2. Uphill legal battles

Laws surrounding renovations on homes older than 50 years vary by city and state, which makes the whole process more difficult to navigate.

You also will be confronted with legal measures that outline safety factors for lead paint and asbestos, for example, as well as rules designed to protect the character of the home via historic neighborhood designations, local historical societies, etc.

3. Expensive maintenance

If you are looking to hold onto your properties, maintaining rentals in older buildings can be more expensive. Even with upgraded plumbing and electric systems, many of the details that make older buildings stand out (from horse-hair plaster to elaborate handpainted architectural finishes) are more difficult and costly to keep up.

Major issues such as uneven settling or root damage in the foundation are more likely in older buildings, and overtime the framing of a house will need costly repairs.

4. Risk all around you

Not every old-stock neighborhood is going to take off. Trying to execute a quick turnaround flip can be difficult if surrounding homes are not receiving similar maintenance, and some neighborhoods just don’t get the love and attention they need to come back entirely.

Investors should take the Kenny Rogers approach with up-and-coming neighborhoods — keep an eye on your hand (as well as what’s being dealt).

Still, no matter the type of investment you’re looking to make, older homes offer a range of benefits to suit your strategy.

If you’re ready to put in the work, there’s a world of opportunity waiting. The perks associated with historic neighborhoods make them a hotbed for potential growth, especially among urban-minded young homebuyers.

Nicholas Brown is a Los Angeles-based writer for JustRentToOwn.com. You can follow his Twitter at @justrenttoown or check in at his blog.

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