Considerations When Buying Older Multi-Family Properties

[Alan Asriants]

Introduction: Investing in multi-family properties can be a lucrative venture, but it's essential to carefully evaluate the condition of the property before making a purchase. Older multi-family properties, in particular, come with their own set of considerations. In this blog post, we'll discuss some key factors to look out for when considering older multi-family properties, and why it may be wise to approach them with caution.

1. The Importance of Renovation: Unless an older multi-family property has already undergone a complete gut renovation recently or you plan on undertaking that work yourself, it's generally advisable to be cautious. Renovating an older property can be a costly and time-consuming process, and overlooking crucial factors can lead to unexpected expenses and headaches down the line.
2. Plaster Walls: One common challenge with older properties is dealing with plaster walls. These walls can be difficult to work with and replace. Over time, imperfections can become apparent, resulting in uneven surfaces when painting or finishing. Consider the extra effort and expense involved in dealing with plaster walls before proceeding with a purchase.
3. Outdated Electrical Systems: Another concern with older multi-family properties is outdated electrical systems. Improper separation of electrical circuits can result in one floor controlling the other, causing inconvenience for tenants. Additionally, low amperage service and panels can make it challenging to upgrade the electrical infrastructure. Keep an eye out for knob and tube wiring, which is not only outdated but also a potential fire hazard.
4. Aging Plumbing: Older properties often have aging plumbing systems, including vent stacks that may need replacement. If you're not planning a full gut renovation, finding and replacing outdated plumbing components can become costly. It's important to assess the condition of the plumbing and consider the potential expenses and inconveniences associated with repairs or replacements.
5. Consider the Layout: Many older multi-family properties have layouts that may not align with modern preferences. Sloped ceilings, low ceilings, and awkward floor plans can create cramped spaces that are less appealing to potential tenants. Evaluate the layout carefully and consider whether it aligns with your target market's preferences and needs.
6. Foundation Concerns: Stone foundations are common in older properties, and they require regular maintenance to prevent moisture issues in the basement. Finishing a basement with a stone foundation can be challenging, and it may be wiser to prioritize proper care and precautions to mitigate potential problems.

Conclusion: While older multi-family properties can offer unique investment opportunities, it's crucial to approach them with caution. Unless the property has been fully gutted and renovated recently or you have plans to undertake that work, consider the potential challenges and costs associated with renovating an older property. Conduct a thorough inspection, assess the condition of key elements like electrical systems, plumbing, and foundation, and carefully evaluate the layout to ensure it aligns with your investment goals.

Remember, investing in real estate is a long-term commitment, and making an informed decision based on thorough research and evaluation is essential for a successful and profitable investment.