Concern if a multi-family is built in 1950s or older?

Question

Hello - Looking to buy my first multi-family home in Cincinnati and perform a house hack to start my career in real estate. A lot of the multi-family homes I'm finding were built in the 1960s or even earlier. Is this a red flag? It's not even currently possible to even find a multi-family that's newer than the 1970s (something could come up of course). I would likely mitigate this risk by budgeting for a higher percentage of construction costs. What are other's experiences? Is this a stay away from this area?

Andy Crawford · Answer

@Jared Brinn a good number of properties in the Cincinnati area do fall into that “older category”, but not all.  Stone foundations, cast iron sewer main stacks, & outdated electrical systems (knob & tube) are a few things to watch for.  These items could be costly with ongoing maintenance and repairs if not considered in your budget.  When you find a property that hits your criteria and you physically walk the property, go straight to the basement…it can tell you a lot.  A good inspector will know these things if you aren’t experienced.

Joseph Cornwell · Answer

@Jared Brinn Like most questions... it depends :)

I personally have purchased several older properties, some well over 100 years old. Mainly it depends on the numbers and your level of comfort and experience in dealing with these older homes. If you have limited access to repair capital, or renovation experience, or do not want a major renovation then it might be best to stay away from older properties that need large renovations. As mentioned by others, if it has already been rehabbed properly then it should not be as much risk, I have seen new construction that was not built nearly as well as older homes, so each house is a unique situation.

A good agent, a good home inspector, and your own due diligence should guide you to minimize risk.

Jordan Noble · Answer

@Jared Brinn properties in Cincinnati are old, no two ways around it.  Personally, i tend to advise clients towards purchasing a remodeled multifamily for house-hacking.  The goal of house hacking is to have as little cash out of pocket to get started and allow you to save more income to move on to the next property.... if you spend all that saved income on maintenance then what's the point.  Don't worry about value-add if you're trying to save cash via house hacking.

With that said, a well-rehabbed property should have mitigated all of the concerns you are stating but as Andy and Marc already stated you are going to want to lean on a great home inspector to advise you on what you are getting  yourself into.  Over time as you walk hundreds of these old homes you will be able to spot right away the issues and appreciate the great work already put into the property.  Hope this helps and good luck!

Joseph Cornwell · Answer

@Jared Brinn That is an important questions each investor must determine the answer to. How much convenience am I willing to give up for x% return? Older properties, or ones requiring large renovations can typically offer better returns at the cost of the time, capital, and convenience versus buying something newer or more turnkey. The more problems you solve the larger return you can expect in general, but as an investor who has does large renovations for the past 5 years, I am definitely shifting into more passive deals that may offer lower returns going forward, and I am okay with that at this point.

Jared Brinn · Answer

@Andy Crawford @Marc Rice @Jordan Noble @Joseph Cornwell @Andrew Cheek Thank you all for the helpful responses. As I've continued to do more research I'm going to mainly focus on post-WWII properties (~1948) and budget for a higher than maybe usual maintenance budget. I'm not experienced in renovations so buying a property with a high need for renovations may not be the best idea for me currently. I would hate to buy a place and need to spend thousands (and potentially more) in getting the foundation, electrical, or plumbing up to date. Thanks to J. Scott from Bigger Pockets on his book about estimating rehab costs.

Andrew Cheek · Answer

I have a 1950's duplex and it has been very solid. Working on the cosmetics can be tricky. A lot of cement backer board and older galvanized pipes can clog easy. It took me 2 days to repair a towel rod due to the crazy pink tile and backer board but I'm not a pro at home repairs myself. You can learn a ton from youtube to help you with basic surface maintenance. You could look for a duplex with solid rental history and a good owner who cleans the gutters, does annual mx on the HVAC, and loves his property. That can lead you into a solid property with low mx. ALWAYS WALK THE PROPERTY WITH YOUR INSPECTOR. They are usually super nice and you will learn a ton by doing this.

Marc Rice · Answer

@Jared Brinn

@Andy Crawford mentioned the good pointers above. All of those things can be mitigated by updating electric or plumbing and by supporting the basement with beams or reinforcing sections with newly poured walls. I’ve seen some pretty bad stone basements in my days that need to be completely redone in sections with modern block replacement. If you have a good home inspection they should be able to look out for you.

Concern if a multi-family is built in 1950s or older?

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