How old is too old when the COC is over 12%

[Michael Ehrmann]

I’m looking at multi family homes in the Cleveland, Ohio area. Some of these homes were built in the early 1900s, but the cash flow is great. The cap rate is about 7.9 - if my numbers are correct. Looking for a little guidance here. What’s your experience with older homes, will it end up being a money pit?

[Andrew Weiner]

There are many homes that are older and have been kept in great shape and they are not money pits.  There are many that need to be demolished and there is no profitable way to bring them back to life.  Getting a home inspection will help you look into those items and you can ask the inspector to try to point out some of those items and give you an idea of cost or longevity.  Also make sure to budget for some preventative maintenance (this isn't just for older homes), driveways, roofs, hot water heaters, furnaces, and AC's all go bad even in much newer homes.  You can have the sewer reviewed with a camera that will give you insight on one of the more costly plumbing repairs.  Also focus on masonry, it gets very expensive and there is no return on investment, driveways, steps, and tuck pointing are the big items for this.  With proper due diligence buying older should not be a problem.