Buying Older Building

[Account Closed]

What do you think of buying an older apartment building? Can this work for long term cash flow? They seem to be lower priced and what I can find. Newer ones are rare to be on sale and cost a lot more. I've been looking for my first larger building (10-12 units). Currently own 2-units and SFHs all built in the 80s/90s.

I toured a 10 and 12 unit building recently and they are built in 1950 and 1970. 2bd and 3bd units. Utils, HVAC, and water heaters are modern and separate on each. Rents are low by around 100-200/ unit. There is plenty of value add left. Location is decent, small town, yet close to city, jobs, and everything that's needed. Little to no crime. Fully leased.

[Andrew Johnson]

Vince S. Take away all of the “big stuff” like plumbing, electric, HVAC, roof, etc. and there are still plenty of 70’s buildings out there with original kitchens, groovy faux wood paneling, popcorn ceilings, really small closets, etc. That doesn’t mean you can’t rent them and make money but at some point a kitchen just dies. In a low-dollar rental it’s really hard to use cash-flow to pay for new cabinets and boring laminate countertops. And if you want to pull down that 70s paneling, well, it won’t be pretty. It’s a good bet those units will just get less and less desirable over time. Still, that’s not to say you can’t cash-flow, make a solid return, etc. but you need some kind of gentrification to make larger-scale updates really worth while.