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Hey guys, I was wondering what your take was on this situation.
I'm thinking about buying a few older rental single family homes vs buying a newer home.
Here are the specs.
Older House
Built: 1950 - 1970
Cost: $40k - $50k
Sqft: 900 - 1300sqft, 3 bed
Rental Income: $600 - $800 /month
On a scale of 1 - 10, 5 being middle class type of house, I would say it's like a 3, it's not in a great neighbor, but it's not what you see on TV when you think of the Ghetto, gangs, violence, etc. That would be a 1 on the scale.
Newer House
Built: 1995 - 2000
Cost: $90k - $110k
Sqft: 1000 - 1400sqft, 3 bed
Rental Income: $1000 - $1100/month
On a scale of 1 - 10, 5 being middle class type of house, I would say it's like a 4, maybe 5. It's in a nicer area. These are like starting homes for young families.
What are you're thoughts?
I could buy much more older houses (2x as much), and cash flow is much better.
Do you feel that a home built in 1950 is old? It's concerned old where I live.
Would I have a bunch of issues with it down the road with the older house or 1950 isn't really that old for a house?
Just my 2 cents, but a house built pre-1960 is likely to be a better quality build originally. Back then people took pride in what they were doing and used good materials. That changed as we as a nation got greedier; sloppy techniques, cheap materials, etc. became common.
That's hard to prove and rather irrelevant for rentals as the items that typically break (appliances) are usually newer anyway. I would go with the new home for lead paint laws.
Location: When you take flak it means you are on target
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Are these houses in Las Vegas or Phoenix? (Going by the rock yards.)
Along with the age of the houses you have to look at the area. Both cities have areas with older homes, however for the most part those areas are not where "nice" people want to live. They are fine if you want to carry a gun to collect your rents and don't expect much appreciation. But in general the newer HOA managed tracts are going to hold value and appreciate better.
I try to buy in outlying areas where new construction and infrastructure will be. This I feel provides the best long term value regardless of the age of the property.
I personally stopped buying rental properties older than 1978 anymore due to lead issues, and I prefer to buy as new as possible. My last house was built in 2007 and my commercial building in 2005. Construction really isn't any different, and in many ways newer homes use better materials (Tyvek wrap vs tar paper, drywall vs plaster and popcorn with asbestos, etc.). Plus replacing stuff is easier with newer homes as things are still in production.
As rentals tenants are gravitating toward the newer neighborhoods too. When prices are the same tenants are going to head for new.
Cost wise (flipping) a newer home selling for $65,000 that needs $10-15,000 to make it perfect is a better deal usually than a house for $35,000 that needs $30,000 and you still end up with a renovated house in a declining neighborhood.
I would go with newer for the same reasons that were already listed.
As far as older being better....long debated, not always true. Older also brings outdated plumbing, HVAC systems, insulation, windows, etc.
Go with newer, and in the best neighborhoods you can afford (for resale).
Hey guys, I was wondering what your take was on this situation.
I'm thinking about buying a few older rental single family homes vs buying a newer home.
Here are the specs.
Older House
Built: 1950 - 1970
Cost: $40k - $50k
Sqft: 900 - 1300sqft, 3 bed
Rental Income: $600 - $800 /month
On a scale of 1 - 10, 5 being middle class type of house, I would say it's like a 3, it's not in a great neighbor, but it's not what you see on TV when you think of the Ghetto, gangs, violence, etc. That would be a 1 on the scale.
Newer House
Built: 1995 - 2000
Cost: $90k - $110k
Sqft: 1000 - 1400sqft, 3 bed
Rental Income: $1000 - $1100/month
On a scale of 1 - 10, 5 being middle class type of house, I would say it's like a 4, maybe 5. It's in a nicer area. These are like starting homes for young families.
What are you're thoughts?
I could buy much more older houses (2x as much), and cash flow is much better.
Do you feel that a home built in 1950 is old? It's concerned old where I live.
Would I have a bunch of issues with it down the road with the older house or 1950 isn't really that old for a house?
Sample pics of older house:
Built 1963
Built: 1969
Sample pics of newer house:
Built: 1994
Built: 2002
Any cash you think you might make off an older home will be spent, as a Landlord, in making repairs. Saw a good example of this recently. The owner of a small ranch just below our home rented it out to a young couple with two kids who soon moved a few friends in then they got a big Golden Retriever who started to tear up the storm door on the back. THEN they decided to fence him in with this miserable portable fencing and he proceeded to poop all over the cement patio directly outside the back door. The place was a mess and they evicted them then had to pay cleaning people, trash haulers and lawn people to fix things up. Where in the world are you gonna find a home built in 1963 for $40K?? or $50K?? Ours was built late 1950's and when we purchased it it was $189,000 and is now worth close to $300,000 because of improvements we made. Your figures are way off. Unless you have a lot of cash and plan to turn the homes over once you purchase them, buying rental property is going to cost you more than any profit you will make. Renters just don't feel obligated to take care of rental property when they have a Landlord who will do it for them. Think this one over big time before you make a move.
Where in the world are you gonna find a home built in 1963 for $40K?? or $50K?? Ours was built late 1950's and when we purchased it it was $189,000 and is now worth close to $300,000 because of improvements we made. Your figures are way off. Unless you have a lot of cash and plan to turn the homes over once you purchase them, buying rental property is going to cost you more than any profit you will make.
For everyone who is reading this thread, please ignore the above ignorant statement from Pammyd, this 14 yr old girl knows more about real estate investing than she/he does.
For Pammyd: There are many places in the entire COUNTRY that has deals like that, so before you say something ignorant, why not just listen and research? Maybe you will learn something.
Any cash you think you might make off an older home will be spent, as a Landlord, in making repairs. Saw a good example of this recently. The owner of a small ranch just below our home rented it out to a young couple with two kids who soon moved a few friends in then they got a big Golden Retriever who started to tear up the storm door on the back. THEN they decided to fence him in with this miserable portable fencing and he proceeded to poop all over the cement patio directly outside the back door. The place was a mess and they evicted them then had to pay cleaning people, trash haulers and lawn people to fix things up. Where in the world are you gonna find a home built in 1963 for $40K?? or $50K?? Ours was built late 1950's and when we purchased it it was $189,000 and is now worth close to $300,000 because of improvements we made. Your figures are way off. Unless you have a lot of cash and plan to turn the homes over once you purchase them, buying rental property is going to cost you more than any profit you will make. Renters just don't feel obligated to take care of rental property when they have a Landlord who will do it for them. Think this one over big time before you make a move.
just compare cost per square foot (purchase price plus repairs). vs. rent per square foot. I have a rent house built in 1950. Its a real charmer and always has lots of applicants. However, it has cost the most of my properties as far as maintenance and repairs. The wiring is still not grounded and lately my new tenants are experiencing breakers switching. The new tenants are running computers and TVs alot plus microwave and dishwasher at the same time and old houses were not wired for all that load. So I probably have to get electrical work done.....another dang expense!
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