Multiple Family/Unit Rentals

[Kristen Ray]

Hello BP!

       We are new REIs in Maryland. We are looking at purchasing our first multiple family unit. However, we’ve noticed that most of the multiple family units in our area are very old. Most of them were built in the mid-late 1800’s and early 1900’s. Our concern is the older the house the more maintenance it will need. Moreover, we are concerned that if we buy and hold the property for a significant period of time it will be hard to sell due to the age of the building.

So what are your thoughts and experiences with purchasing older properties as investments?

In addition, we’ve noticed several multiple family units have few bathrooms. Thus, tenants from the various units would have to share bathrooms.

What have been your experience with such a set up?

Please share

[Cara Lonsdale]

The inspection period will be important to you.  Take a qualified inspector or contractor out there with you to go over the property with a fine tooth comb.

Old homes can provide a great pricing opportunity, especially if you are wanting to rehab it anyway.  However, they can also be VERY expensive if the maintenance has been deferred for too long.  So, just know what those costs will be.

Regarding the bathrooms, you will have to do your research to see if the Tenants in the area tolerate sharing bathrooms.  Something like that would never fly where I am, but it may be a more common practice where you are, so you have to check.  If it's not, then you will have to discuss with your contractor what it will take to add bathrooms (permits, construction, expense).

Keep in mind, when you start touching anything in these places, the city will most likely require you to upgrade other things too.  Once I wanted to add a non-load baring wall in a place, and the city inspector required me to update and add smoke detectors throughout the whole house.