Why not buy historic homes?

[Ben Stout]

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?