Investing in older single-family homes to keep it as a rental property can be a successful strategy. But then again, you must keep in mind the many pros and cons that come when one chooses to buy older homes instead of new ones. For instance, older homes usually offer a great location, lower purchase price, and a more stable market rate. And yet, there are also downsides to purchasing an older home, that consist of a higher cost of repairs and improvements, lower energy efficiency, and the risk of losing out on widespread renter appeal. When analyzing properties for your next investment property in Locust Grove, both the pros and cons should be considered carefully before making any final decisions.
There are many strong points when buying older homes to use as rental properties. No doubt, one of the key benefits an older home offers is the location. Not at all similar the newer homes that tend to be located far from many of the area’s best amenities, older homes can often be found within a short distance of desirable social and commercial areas. To the Millennial renters, young professionals, or seniors who want to make the most of their retirement, a rental home with effortless access to the downtown area or other attractions can be a huge draw. Older properties also are likely to be found in well-known neighborhoods, which typically have more predictable rental rates. Being able to reliably forecast your rental income is one of the most notable benefits of purchasing an older home.
In multiple situations, older homes give the satisfaction of being more affordable than new construction. This can usually lower the upfront cost of the property and allow investors to regulate how much cash is used on any improvements or upgrades. While an older home is expected to involve some work, investors can control costs by choosing to do some of the work themselves or by scheduling projects to maximize cash flow. Depending on the age and condition of the home, investors may furthermore be able to score on higher quality construction and a more traditional floor plan. Such features may be charming to specific demographics, particularly renters looking for a home with a unique look or feel.
Although these benefits can make older homes an attractive option for investors in Locust Grove, there are also some drawbacks. Older homes tend to have outdated heating and cooling systems, plumbing and wiring problems, and so forth. They may also have code compliance issues, which can be an expensive fix. Windows in older homes are often less energy efficient than newer ones, creating higher energy bills and making it difficult for tenants to control the temperature inside the home.
Unlike basic maintenance and repairs, older homes carry the risk of expensive updates and improvements that are required to get the home both safe for occupants and attractive to potential tenants. The more expensive upfront costs that result may set a short-term strain on your cash flow, making it fundamental for investors to feel positive about funding repairs, big or small.
Some additional potential disadvantages of buying an older home could be the composition of the neighborhood. It is vital to gather detailed information on a neighborhood before buying there, observing for signs of neglect. More often than not, the area in which the home you pick may be due for a water main, or sewer line upgrade and these projects normally come with a hefty special assessment or tax to the owner that can be due as soon as possible. If the area is in deterioration, property prices may be low but so too might be the home’s expected future market value.
Older houses can make excellent investment properties, except they can also turn out to be a drain on an investor’s finances. Even if old houses allow several features that newer homes do not, careful evaluations, and market assessments are an absolute necessity. We can help investors evaluate and vet potential rental properties as well as furnish detailed information about the home’s neighborhood and the current state of affairs in regards to the rental market in Locust Grove. We are genuinely devoted to helping real estate investors make the best possible investment decisions. Contact us online or call 678-467-3039 for more information on how we can help you.
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