1920 properties worth investing or not?

Question

Hello all,

I wanted to inquire about 1920 properties. I am looking at some single family homes in the Toledo area. The package consist of 11 properties with an attractive 13% cap rate. All properties are recently renovated and now occupied. 8% maintenance was factored into the cap rate. Are these properties worth investing in for long term passive income or do they come with scary surprises in the long run. I would appreciate any advice. Thanks

Matthew Paul · Answer

Every house has surprises , it could be built in 1920 , or 2019 .

Peter Lohmann · Answer

Older homes are much more maintenance-intensive than newer homes, materials quality notwithstanding. Anytime you go to do anything in an old house, it turns into a huge project with lots of unknowns and unexpected expenses. A new home is much easier to work on and the expenses are predictable.

Jim Adrian · Answer

I have a house built in 1935.  Its all about if the house has good bones.  All depends on how old the infrastructure is on the house. What has been replaced and what hasn't.  The walls will be plaster, bonus if they used plasterboard (aka drywall) behind the plaster.  Exterior walls may not be insulated, mine wasn't.  Make a list of the plumbing, elect, mech, roof, windows etc of how old things are.  Figure out a replacement cost on those items.

Robert Ellis · Answer

as well as everything else lol. plaster, knob and tube wiring, wood windows need to be replaced, roofs almost always, chimneys always have issues.. you gotta get these columbus houses cheap for how much we put into them

Steven Foster Wilson · Answer

Houses built back in the day were built better then houses today. I have a 1900 duplex in Columbus and the foundation, brick walls, and joists are in great condition.

However with age comes need for new appliances, furnace, water heater, ac unit, and maybe even some cosmetic updates.

Lamont Marable · Answer

What type of renovations?  New mechanicals, new plumbing, new roof, electrical...what?  Get a  home inspection.  Though homes inspections would be pricey for 11 homes, try doing a "walk and talk" inspection which can be cheaper than a full inspection.

Ned Carey · Answer

@Shahbaz Qavi  I work in Baltimore and many of the houses are that old or even older. Often these houses have had full renovations at some point so the effective age is not nearly as old.

Typically we are buying row houses and replacing all the systems. We don't exactly do a full gut but basically I would call it a full rehab. I expect these houses to still be sound in 30 years.  They may be obsolete functionally and cosmetically due to all the innovations coming in the next 30 years. But that would be true with a brand new house built today.

Martin Neal · Answer

@Shahbaz Qavi I would say yes because there are homes from the 1800’s still standing so I say yes.

Kevin Moules · Answer

@Shahbaz Qavi, I agree with @Matthew Paul 100%. In my work as a handyman there are houses built in the last 20 years that fall apart much faster than houses built 60-70 years ago. I was just explaining to my dad how I was replacing facia on a 90's house that was just completely dry-rotted because the houses use that cheap pre-textured wood trim. If they had just used standard doug fir and painted it, it would still be there. They will come with their surprises, the wiring is old and so is the plumbing but run your numbers for maintenance and cap ex conservative and see how they pan out. good luck!

Johann Jells · Answer

Guess it depends on where you are. Around here in rowhouse territory it's pretty common, bad foundations on soft ground, bulging facades, entire buildings leaning on their neighbor. Seen it all. You can tell when you walk in whether a building is solid. It feels solid. The stairs don't bounce, the treads aren't pulling from the wall stringer, the handrails and newel posts aren't waving around when you put your hand on them, the whole house doesn't shake when one apartment door is shut.

I've been very shy of buying someone else's renovation work in 100 year old buildings, especially if it's from a  flipper.  You won't know what they hid till it breaks or leaks. I've seen them try and hide severely sagging floors by making them multilevel. I'd rather buy one that has gotten band-aids on band-aids over the years, like carpet on hardwood and paneling on plaster, and peel it off to restore it.

1920 properties worth investing or not?

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