What's your thoughts on old homes? (built in 1830)

[Yixue Zhao]

Hello friends! I'm new to real estate investing and this is my first post :) Like many of you, I got inspired after reading Rich Dad Poor Dad and then started reading real estate books recently and I'm ready to make a move now yay! I just started looking for my first deal where I plan to live with my husband first, and then rent it out after a year or so.

I live in Northampton, MA and there are not many available listings currently. But I came across a cute house that's built in 1830 (almost 200 years old!) Well, I personally love antiques but from Brandon's book, I also learned that old homes are usually more costly and risky (e.g., more repairs, high utility bills since it's not energy efficient, some unforeseen problems). There are also many other potential pitfalls that I saw on YouTube videos. As a newbie, I'm not sure whether it's too risky to buy such an old house as my very first property (but people also learn a lot from the mistakes in their first deal so maybe it's fine? lol). Anyway, just wondering what's your thoughts on this and what are some factors I should consider in this particular case to make my final decision?

Thank you very much! I really appreciate some guidance to help me join this exciting journey with you all :)

[Ken P.]

People from outside of New England don't understand that the vast majority our housing stock is very old. You don't get to be picky and only look at homes built newer than 1960 like you can in other regions. 

Ony of my duplexes was built in 1825 and suffers from all the issues you mentioned. Poor insulation, deferred maintenance, etc. When I bought it the roof had a leak covered with a tarp for the last 5 years. The numbers work out nicely, though, because I bought it at a good price and factored in repairs when running my numbers. It has been a lot of work, though. 

My advice would be don't run into it blindly but don't run away from it either. Have someone in your corner that has a lot of experience inspecting/working on old homes from a construction standpoint. This doesn't mean just someone that has good reviews on Google, you'll have to ask around in your network or attend meetups and find someone really familiar with old homes. 

Typically with homes that old someone along the way has updated certain systems. You'll need to know what was updated and when. That house literally predates electricity being common in homes by almost 100 years. Did they update the electrical beyond knob and tube? Is the sewer line clay? Cast iron? What shape are the sill plates in? What's the heating system like? 

If you're lucky someone has already updated these things ahead of you. All of my wiring was redone in the 90s, and most of my plumbing was converted to PVC and copper at some point as well. Don't cheap out on the inspection stage for a property you're really serious about. I had an inspector, a separate sewer line inspection, a structural engineer, and a contractor all looking at the house. Negotiate for a longer than usual inspection period. I've had my fair share of issues with this house, but so far they were all things I knew would probably come up based on those inspections. 

Lastly, I would caution anyone getting into an older home that isn't handy at all or willing to learn. Death by a thousand paper cuts is very real if you have to hire out every little leaky faucet, rubbing door frame, or running toilet. None of those things are terribly hard to fix nor are they expensive but it could become expensive if you always have to call someone out. Of course, this may be a non-issue depending on the deal. 

Run your numbers conservatively to account for maintenence and repair costs. 

Good luck!