Apartment Buildings built before 1980 - Concerns/Potential Issues

[Jeffrey Sublinsky]

My team and I are looking at buying several buildings that were built before 1980. What items inside and outside of the building should we be aware of when doing our due diligence? Also, are there any specific tests and inspections recommended for buildings of this vintage? Any resources to reference for a deeper dive? Thanks.

[John Warren]

@Jeffrey Sublinsky most syndications won't touch 1970's or older because the electrical and plumbing started becoming a lot more reliable/modern in the 1980's. You start seeing copper supply lines, PVC drain lines, larger electrical services, modern breakers, sufficient electrical service to kitchens and baths, etc. Syndications are just looking to snag the equity by applying the value add, and the older buildings have challenges that some of them cannot underwrite. If you have a national search going, there is no reason to "settle" on an older building. 

For local value add investors, I don't see any reason not to look at older product. You will probably have more upfront CapEx to do, but once you address the big issues then you should be fine. Just make sure you are adequately accounting for these issues when you buy.