It can be economically viable to make investments in older single-family residences for use as rental property. There are many pros and cons to choosing older homes over new ones, though. Older homes, for instance, frequently provide a great location, a lower purchase price, and a more consistent market rate.
But there are also downsides to buying an older home, including a higher cost of repairs and improvements, lower energy efficiency, and the risk of losing out on widespread renter appeal. When searching for your next investment property, both the pros and cons should be considered carefully before making any final decisions.
Benefits of Older Rental Homes: Prime Locations and Steady Income
Buying older homes to use as rental properties has many advantages. The location is arguably one of the most significant benefits an older home offer. Older homes are frequently located within a short distance of desirable social and commercial areas, in contrast to newer homes that are frequently located far from many of the area’s finest amenities.
A rental home that is conveniently located near the city center or other attractions can be an appealing option for Millennial renters, young professionals, or seniors who are preparing to retire. In established neighborhoods, older properties are also present, typically with more predictable rental rates. One of the most significant benefits of buying an older home is your ability to accurately forecast your rental income.
In many areas, older homes offer the benefit of being more affordable than new construction. This can drastically lower the upfront cost of the property and give investors control over the amount spent on any improvements or upgrades. Investors can control costs by performing some of the work themselves or by planning projects to maximize cash flow, even if an older home will probably require some maintenance.
Additionally, investors might be able to count on more traditional floor plans and higher-quality construction, depending on the age and condition of the home. Certain demographics, particularly renters seeking a home with a unique look or feel, may find these amenities appealing.
Drawbacks of Older Rental Homes: Costly Updates and Maintenance
There are some disadvantages to older homes, even while these advantages may pull in investors from all over the nation. Older homes frequently have plumbing and electrical issues, antiquated heating and cooling systems, etc. Additionally, they might have expensive code compliance issues. Older homes frequently have windows that are less energy efficient than modern ones, which results in higher energy bills and makes it difficult for renters to control the temperature inside the home.
Unlike essential maintenance and repairs, older homes carry the risk of expensive updates and improvements to make the home both safe for occupants and attractive to potential tenants. Because of the potential short-term strain on your cash flow caused by the greater upfront expenditures, it’s critical that investors have confidence in funding repairs of any size.
Assessing Older Homes for Potential Issues
The nature of the neighborhood could be another potential disadvantage of buying an older home. Before buying in a neighborhood, it’s crucial to get comprehensive information on the area and look closely for any signs of neglect.
A water main or sewer line upgrade is sometimes required in the neighborhood where the house you choose is located, and these improvements typically include a costly special assessment or tax to the owner that is due right away. The predicted future market value of the home may also be low if the neighborhood is in decline, which would affect property prices.
Although older houses might be great investment properties, improper management can quickly deplete an investor’s funds. Old houses have numerous aspects that newer homes don’t, so thorough appraisals and market analyses are still required.
Investors can evaluate and vet potential rental properties with the assistance of Real Property Management Success, which can also offer comprehensive details about the neighborhood and local rental market in Fairhaven and the surrounding areas. Our goal is to assist real estate investors in choosing their investments wisely. To learn more, give us a call at 774-840-5140 or send us a message!
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