Old multifamily buildings

[Matt OToole]

I am considering buying a multifamily property in the city of Chicago in the $750k-$1.5 million range.  Likely a 2-4 flat.  This would be to live in for a couple years then maybe move out, but hold forever.

Most of these properties are in the 100 year old (or older range), so this does concern me. 

I am wondering if a building that age would have so many issues over a long hold period that it would be a poor investment?

Anyone have experience in Chicago or elsewhere?

Thank you!

[Evan Polaski]

@Matt OToole, I am a bit biased with older buildings, as I have lived in and invested in properties that almost exclusively built pre-1940.  The "newest" property I have ever acquired was built in 1961.

Things to look out for, but are all fairly obvious during inspection: type of wiring, boiler vs forced air heat/air, foundation issues, tuck pointing on a brick property, sewer line scope (particularly if trees are near front of property).  This is not an all inclusive list of inspection items by any means, but big ticket items.

From a Capex perspective, items like a roof, HVAC, water heater, finishes, appliances, kitchen style, etc will all need replaced anyways, whether the property was built yesterday or 100 yrs ago. So should be accounted for as immediate and/or future Capex.

What I prefer about older properties: settling has occurred and any foundation issues are generally evident, which cannot be said for new construction.