It’s possible to make money by buying older single-family houses to use as rental property. There are many pros and cons to choosing older homes over new ones, though. For instance, older homes often have a great location, a lower price, and a market rate that stays stable.
However, there are some downsides to buying an older home as well, such as a higher cost of repairs and improvements, lower energy efficiency, and the possibility of missing out on widespread renter appeal. As you look 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
Buying older homes to use as rental houses has many advantages. The location is arguably one of the biggest benefits an older home can offer. Older homes are often close to desirable social and commercial areas, in contrast to newer homes, which are often far from the best amenities in the neighborhood.
Millennial renters, young workers, and seniors who want to enjoy their retirement may be very interested in a rental home that is close to the city center or other attractions. Older properties, usually with more predictable rental rates, can be found in established neighborhoods. One of the most significant benefits of buying an older home is your ability to accurately forecast your rental income.
In many areas, older homes offer the benefit of being more affordable than new construction. This can substantially lower the upfront cost of the property and give investors power over how much is spent 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 repairs.
Real estate investors may also be able to count on better construction and a more traditional floor plan, depending 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 may be appealing to investors from all over the country because of these advantages, but there are also some cons. A lot of the time, older houses have problems with their plumbing, wiring, heating and cooling systems, and other things. Additionally, they might have expensive code compliance issues. There is a good chance that the windows in older homes are not as energy efficient as windows in newer homes. This means that renters will have higher energy bills and find it difficult to control the temperature inside the house.
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 Legend, we can help investors evaluate and vet potential rental properties and provide detailed information about the home’s neighborhood and the local rental market in Irving and nearby. We are dedicated to helping real estate investors make the best possible investment decisions. Contact us online or call 214-227-2404 for more information!
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