There are pros and cons to choosing older homes over new ones when looking to invest in older single-family homes as a rental property. Older houses frequently have a great location, a steady market, and can be less expensive than newer ones.
But there are also downsides to buying an older home, like a higher cost of repairs and improvements and perhaps less appeal to renters. When searching for your next investment property, both the pros and cons should be considered carefully before making any final decisions.
Benefits of Older Rental Homes: Prime Locations and Steady Income
The location is one of the best things about buying older homes. Older homes are usually closer to places to shop and hang out than newer homes, which are typically farther away from the area’s best features.
Millennial renters, retirees, and other demographics looking for a rental home close to the city center will find them appealing because of this. Investors can more correctly predict their rental income thanks to the predictable rental rates offered by established neighborhoods.
In many areas, older homes offer the benefit of being more affordable than new construction. This can greatly lower the upfront cost of the property and give investors the ability to decide how much to spend on any improvements or upgrades. Investors can control costs by performing some of the work themselves or by planning projects to maximize cash flow, even though an older home will probably need some work.
Additionally, investors may be able to count on better construction and a more traditional floor plan, though this will depend on the age and condition of the home. Certain demographics, especially renters searching for a home with a unique look or feel, may be drawn to these features.
Drawbacks of Older Rental Homes: Costly Updates and Maintenance
Older homes can be appealing to investors all over the country because of these advantages, but there are also some cons. Most of the time, older houses have plumbing, wiring, and heating and cooling systems that aren’t up to date. Additionally, they might have expensive code compliance issues. Older homes often have windows that are less energy efficient than newer homes, which results in higher energy bills and makes it difficult for renters to control the temperature inside the home.
Unlike essential maintenance and repairs, older homes carry the risk of expensive updates and improvements to make the home both safe for occupants and attractive to potential tenants. The higher upfront costs that result may put a short-term strain on your cash flow, making it important for investors to feel confident about funding repairs, big or small.
Assessing Older Homes for Potential Issues
The demographics of the neighborhood are another possible disadvantage of buying an older home. Before buying in a neighborhood, it’s important to gather specific information on it and look closely for signs of neglect.
A water main or sewer line upgrade may be necessary in the neighborhood where you want to live, and these projects typically come with a sizable special assessment or tax to the owner that is due right away. Property prices may be low in a declining area, but the home’s predicted future market value may also be low.
Older houses can be great investment properties, but if they are not handled properly, they can also drain an investor’s savings account. Even though old houses have many benefits that newer homes don’t, they need to be carefully looked at and compared to the market.
At Real Property Management Acadia, we can help investors evaluate and vet potential rental properties. We can also give them detailed information about the home’s neighborhood and the local rental market in Brewer and the surrounding area. We are committed to helping real estate investors pick the best properties to buy. You can contact us online or call 207-561-7482 to find out more!
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.
