Old house - how much to budget for major repairs + maintenance?
Oakland, CA · Member since 2015 · 17 posts · 8 votes
Old house - how much to budget for major repairs + maintenance?
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Investor · Saint Petersburg, FL · Member since 2013 · 73 posts · 29 votes
5yHow many units? I have no idea about true apartment buildings, but I own 2 duplex's and one triplex built in 1925,1925 and 1930. Most of our SFH are similar vintage, the oldest built in 1918. All purchased in 2014.
We mostly spent funds (and budgeted for that) on purchase to get them in good condition. Same as any other property. Paint, flooring, roofs and normal deferred maintenance. For rentals, it doesn't seem to pay to upgrade kitchens and baths if the existing ones are functional. Save that for consideration at sale time. The one exception was electric wiring, we had one with knob and tube which required a complete rewire. Have also had a few window replacements. And a couple sewer line replacements.
Once rented out, there doesn't seem to be a big difference. One of our exceptions to being old was a 1978 duplex. That thing was built on the cheap and has cost more than we planned based on age. No formal stats...and nothing newer than 30 years old...the difference between 30 years and 100 years old hasn't been significant.
We've done several roofs and replaced lots of air conditioners. But with maybe 15 year service life here in FL, age really isn't a factor for these unless your looking at brand new builds.
The biggest thing to consider, in my way of thinking, is the neighborhood. Here it's trendy to live in the close in older neighborhoods. Property sells for way more per sqft in the upcoming older neighborhoods than in the further out suburban areas. But this isn't universal. Has to be in the trending neighborhoods, it's not equal. So to some degree, you really need to understand the local market. I know this is RE 101, but worth the emphasis when looking at renovating and managing property in older neighborhoods. For example, I looked at some really cool row houses in Baltimore City with a friend. They have tremendous potential, but I felt like investing there would be trendsetting. That's risky.
18 Replies
- Investor · Saint Petersburg, FL · Member since 2013 · 73 posts · 29 votes5y
How many units? I have no idea about true apartment buildings, but I own 2 duplex's and one triplex built in 1925,1925 and 1930. Most of our SFH are similar vintage, the oldest built in 1918. All purchased in 2014.
We mostly spent funds (and budgeted for that) on purchase to get them in good condition. Same as any other property. Paint, flooring, roofs and normal deferred maintenance. For rentals, it doesn't seem to pay to upgrade kitchens and baths if the existing ones are functional. Save that for consideration at sale time. The one exception was electric wiring, we had one with knob and tube which required a complete rewire. Have also had a few window replacements. And a couple sewer line replacements.
Once rented out, there doesn't seem to be a big difference. One of our exceptions to being old was a 1978 duplex. That thing was built on the cheap and has cost more than we planned based on age. No formal stats...and nothing newer than 30 years old...the difference between 30 years and 100 years old hasn't been significant.
We've done several roofs and replaced lots of air conditioners. But with maybe 15 year service life here in FL, age really isn't a factor for these unless your looking at brand new builds.
The biggest thing to consider, in my way of thinking, is the neighborhood. Here it's trendy to live in the close in older neighborhoods. Property sells for way more per sqft in the upcoming older neighborhoods than in the further out suburban areas. But this isn't universal. Has to be in the trending neighborhoods, it's not equal. So to some degree, you really need to understand the local market. I know this is RE 101, but worth the emphasis when looking at renovating and managing property in older neighborhoods. For example, I looked at some really cool row houses in Baltimore City with a friend. They have tremendous potential, but I felt like investing there would be trendsetting. That's risky.
- Member since 2020 · 120 posts · 135 votes5y
Originally posted by @Bob Ebaugh:
For example, I looked at some really cool row houses in Baltimore City with a friend. They have tremendous potential, but I felt like investing there would be trendsetting. That's risky.
Hey Bob, your post is super informative for a lurker like me haha. I'm curious what neighborhood were you referring to in Baltimore?
- Investor · Saint Petersburg, FL · Member since 2013 · 73 posts · 29 votes5y
Truth is...I'm probably not a good judge of Baltimore. I did grow up in Carroll County just NW of the city, but know little about Baltimore. The comment was based on a desk review of a couple places within 4-5 blocks of John Hopkins Medical Center. Which happens to be near Fells Point, which is analogous to the neighborhoods we like in St Pete. But these were on the opposite side of Hopkins, and it looked like it might take a few years to catch up. But this review limited to real estate listings and Google street view. I don't remember the exact street addresses.
- Member since 2020 · 120 posts · 135 votes5y
@Bob Ebaugh
That's totally fair. I used to live in Fells point, which was pretty cool. Upper Fells (south of Hopkins Medical) is up and coming, although, you could just as easily argue it already came lol.
- Oakland, CA · Member since 2015 · 17 posts · 8 votes5y
@Bob Ebaugh thanks for your input! To clarify, I'm referring to duplexes-quads -- not commercial property.
Would you be willing to share how much your costs were roughly for the deferred maintenance upon purchase (or any other hard numbers that might be useful)? Cheers! - 5yLien VuongBusiness MemberReal Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes
Have you looked at the file share portion of the site? That might be helpful for you to look at what people have budgeted in the past. Your agent might be able to give you some insight for figures also. Good luck!
The Elle Group5154 Reviews - Oakland, CA · Member since 2015 · 17 posts · 8 votes5y
Haven't seen that before - thanks @Lien Vuong, I'll check it out!
- Rental Property Investor · St. Louis, MO · Member since 2014 · 741 posts · 424 votes5y
Hi @Palmira Angelova Take what you think you need (roof and systems) and keep 20% more in reserves for what you don't know. I own 100 year old brick buildings and they need stuff. Tuckpointing is pricey and one doesn't get to raise the rents, or when replacing awful concrete. Maybe you could find one that someone else has already put back together - new electrical and plumbing, less long distance headaches.
My property managers were helpful with penciling out quotes for updates, while I was investing from out of state. They also gave me the thumbs up or thumbs down as to know if a location was one on the up and coming or one where landlords were struggling to keep tenants happy. Find a PM company in Boston and ask questions.
- Investor · Saint Petersburg, FL · Member since 2013 · 73 posts · 29 votes5y
@Palmira Angelova it varies so much on the specific property. The first one we bought, we actually live in today (5 years later) as our primary home. It was a duplex, sort of. 2 stand-alone 1925 houses on a single 40x100' lot. A 720 sqft 2/1 main house and a 450 sqft 1/1 cottage. Not counting the screened porches and stand-alone garage. The roofs were recently done. But the place had termite damage. Especially the windows. There are no old houses here without some history of termites. Both houses had knob and tube wiring. Both houses had window A/C units. We spent $20,000, or 20% of purchase price on termite fumigation of all structures, re-wiring the main house and replacing the old AC panel, exterior painting, replacing all the old windows, and putting in new central A/C in the main house. The cottage had a tenant. So we waited on that building. Years after purchase, we've re-wired the cottage and replaced all those windows too. That was less, about $7000. It still has window A/C, not especially unusual, but still on our eventual hit list.
The oldest house, a 1918 bungalow. A small 2/1 with 700 sqft and stand-alone garage. It was a recent "flip", we bought it from the first post flip owners that decided urban living wasn't for them. But it was in pretty good shape. All we did was change the locks and rent it. So it really varies a lot. All we've really done there since purchase, slightly out of the ordinary is replace the sewer line from the house to the street connection. That was about $4000. We also swapped out the central AC equipment ($2700) and reroofed both the house and garage ($6500), but both of those were expected at some point due to the age at purchase. Exterior paint coming soon.
A couple others:
1925 Triplex, 2 1/1's and 1 2/1. It needed paint, new roof and fumigation for termites, central heat and air for each of the 1/1 units. Spent about $20,000 there. It was a foreclosure.
1930 Over/Under duplex. 2 2/1 units, but large for here at > 1000 sqft a unit. Both had tenants at purchase. Unusual structure, originally a doctors house with living upstairs and the office practice space downstairs. Later, but way before we bought it, the downstairs was converted to a second residence. We fumigated, painted the exterior and re-roofed only the 3 car garage. Also some fixed some deferred tenant complaints. About $15K at purchase.
- Member since 2020 · 13 posts · 4 votes5y
Definitely make sure and see an assessor. One of my friends thought they could save the money, because their father has built/rebuilt it himself. Unfortunately, the costs they have to pay for undetected water damage and various other defects and many broken windows were much much higher. So also check all windows!
- Rental Property Investor · Westminster, MD · Member since 2014 · 165 posts · 221 votes5y
@Bob Ebaugh
I'm currently living in Good Ole Carroll county and investing in multifamily properties around the area.
- Oakland, CA · Member since 2015 · 17 posts · 8 votes5y
@Kathy Henley @Bob Ebaugh thank you both for the advice and specific numbers! Will definitely keep what you've both said in mind as I'm analyzing
- 5yMatthew Irish-JonesBusiness MemberReal Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
@Palmira Angelova. Lots of old houses In our market as well.
It's far less about the agent if the house and more about the age of the major CapEx components.
If you have new plumbing, electrical, windows, HVAC, and a new roof you are in good shape.
If they Mechanical’s are extremely old you are better off creating line item costs and projecting their replacement date. That way you are using actuals spread over time as opposed to a %.
Using a % is ok for quick and dirty analysis. It’s better to get hard costs for accuracy.
Irish Jones Realty4.947 Reviews - Oakland, CA · Member since 2015 · 17 posts · 8 votes5y
That's great advice, thank you @Matthew Irish-Jones! Do you normally use your local contract to get estimates on the major CapEx components, as you're conducting analyses?
- Real Estate Agent · Chicagoland · Member since 2018 · 314 posts · 199 votes5y
I have renovated a couple older properties, and the best advice I can give is: budget for more than you think. Are the pipes 100 years old too? Did they use lead solder? Is there lead paint? Is the electrical system a knob-and-tube death trap? Is there asbestos in the ceiling or floor? These are important questions to ask on a visit. Some of these items will require immediate attention, some you can wait on, all are expensive to fix or remove.
Another important thing to consider in an older city like Boston is historical districts. If the house is in a historical district, there may be covenants that stop you from making certain upgrades without a ton of red tape. Some you may not be able to make at all. I don't want to discourage you, there are plenty of deals in older properties, but be sure to do your research. Good luck!
- 5yMatthew Irish-JonesBusiness MemberReal Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
@Palmira Angelova getting a local contractor is a good source. We have all of this information internally from our property management division.
It took a lot of time to develop though
Irish Jones Realty4.947 Reviews - 5yPeter TverdovBusiness MemberDeveloper · New Brunswick, NJ · Member since 2015 · 1k+ posts · 2k+ votes
We do property management in New Jersey and most of the houses we manage are over 100 years old. On average we like to tell the owners to budget about 8% for maintenance each year.
The best way to do it, is to gut these places and put in new plumbing, electric and heat/cooling. The wood they used back then is better than today, so the bones are often good in these homes.
- 5yDerreck WellsPro MemberSpecialist · Pelham, NH · Member since 2013 · 544 posts · 269 votes
I just wanted to drop you a note on the new lead paint laws in MA; They now only give you 90 days to delead when you buy a rental. If you don't delead within 90 days, you can be held liable for any lead poisonings that have ever happened at the building, even if it was before you owned it. They basically hold the building liable rather than the owner and that liability transfers from owner to owner until someone deleads it and breaks the chain. If you delead, and maintain the standard, you will be in the clear. I recommend a Post Compliance Lead Determination (PCAD) every 5 years or so.
Here's the law (emphasis added by me):
460.100: Duty of Owner(s) of Residential Premises
(B) Whenever any residential premises containing dangerous levels of lead in paint, plaster or other accessible structural material undergoes a change of ownership and as a result a child younger than six years old will become or will continue to be a resident therein, the new owner shall have 90 days after becoming the owner to obtain a Letter of Full Compliance or a Letter of Interim Control, except that if a child younger than six years old who is lead poisoned resides therein, the owner shall not be eligible for interim control, unless the Director grants a waiver pursuant to 105 CMR 460.100(A)(3).
Note it says "a child younger than six years old will become ... a resident therein...". It is assumed by the state that any rental larger than a 1 bedroom will fall into this category at some point because of the anti-discrimination laws that prevent landlords from refusing a family because they have a child. The law specifically excludes rentals under 250 square feet. Basically this is their way of getting all rentals lead safe. If you don't delead, you will be putting yourself in a dangerous position.This isn't a bad thing! You can use this knowledge in your negotiations. Assume $5k per unit and count the exterior as a unit. So a 3 family is 4 units = $20k for your negotiations. They rarely cost that much, they're usually half that, but if the property needs windows and exterior doors, it can get expensive. Like I said though, most come in about half that (windows are usually already upgraded), so use $5k to negotiate and even if you get a 50% concession you could still potentially get it all paid for by the seller.
I can run any addresses through the database for you and see if they've been inspected or deleaded. Right now they’re behind on updating it though, so it may have been inspected and I just can’t see it yet. Sometimes they get inspected but not deleaded and this creates a whole other set of problems. If that's the case, you can't do any renovations until you have it professionally deleaded or it would be flagged for Unauthorized Deleading and you can get fined and the property would never be able to get a Lead Certificate, only a letter of Environmental Protection that states you did illegal work, got caught, then had to pay a professional to clean up the mess. You don't want that.
If you don't already have a lead inspector you like to use, I recommend Anderson Lead Inspections, www.andersonlead.com. No, I don't get a referral fee or anything, I just know he's fair and works to help owners.
Let me know if you need any help or have any questions.
Good luck on your investing!
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