Advice on potential duplex built in 1900

[Chad Woods]

Greetings,

Relatively new investor here and I am looking at purchasing an older duplex that was built in 1900 (BRRRR worksheet attached). I have not been able to go into the units yet due to them being occupied. It has been on the market for about 9 months and the owner apparently doesn't want to let potential buyers inside unless they are "serious", as he has had many tire-kickers in the past. The photos look like the property has been updated and he says he has paper work showing upgraded electrical, hvac, roof, termite letter, etc.

Assuming my numbers are accurate, the buy would make sense and would provide cashflow after the refinance but my repair value has been guesswork since I haven't been inside (assuming the owner has updated the interior). Does anyone have experience with older properties like this and what should I look for when I do convince him that I'm serious?

Also, would it be advantageous to provide different offers on something like this (i.e. something that is older and has been listed for so long) such as seller financing? I could purchase outright or use a conventional loan but was curious if there were some advantages to offering different options to the seller such as purchase the property for less than he's asking for in cash / loan OR seller finance for a little bit more but tie up less of my cash up front. Thanks in advance. 

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*This link comes directly from our calculators, based on information input by the member who posted.

[Paul Shannon]

Originally posted by @Chad Woods:

@Paul Shannon that's my main concern with it being so old. I should know more this weekend. The tenants are month to month right now, so I would have to get them out to do anything significant to address anything major.

Other than "old home" issues, is there anything you would recommend looking for that I may not be thinking about?

As I said, relatively new investor..especially in the realm of older properties.

Thanks

I’d look at the plumbing and eclectic closely.

If you can get into the sewer line with a camera.....bonus.  Clay, cast iron, galvanized steel, likely will need to be replaced to PVC or pex throughout.  

Knob and tube electric was standard in early 1900. Still see it in some homes. Gotta go.  Look at the outlets.  Are they 2 prong?  They aren’t grounded if so. Gotta update electric to at least 100 amp service.  Look at the panel.  Your walls are likely plaster, so to get to the wiring, you’ll have to bring it down to studs and then drywall.  Can get around this but talk to your contractor.   

Roof - when was it last replaced?  Does it have decking or is it a cedar shake roof.  Cedar shake will cost extra.  

Just a few things that come to mind.  Inspect the foundation most importantly.  Everything can be fixed, but that will be your biggest expense if you don’t catch it And budget for it before you close.  

Also, consider utilities.  Are the units separately metered?  Don’t have to be, but if not, you’ll be covering utilities or billing them back to the tenants.  Check the average bill with the utility companies.