Investing in older single-family homes as a rental property can be a sound financial decision, though it’s important to weigh the pros and cons to choosing older homes carefully. These homes often offer benefits like a great location and more affordable purchase prices. However, they also come with drawbacks such as higher cost of repairs and improvements, lower energy efficiency, and a reduced likelihood of widespread renter appeal. 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
One of the most significant benefits to buying older homes for rental purposes is location. Newer homes are often built in outlying areas, but older homes tend to be situated near the area’s best amenities, such as social and commercial hubs.
This is an appealing factor for Millennial renters and retirees who prioritize convenience. Older properties in established neighborhoods also tend to have more predictable rental rates, making it easier to forecast your rental income.
In many areas, older homes offer the benefit of being more affordable than new construction. This can significantly lower the upfront cost of the property and allow investors to control how much is spent on any improvements or upgrades. While an older home will likely need some work, investors can control costs by doing some of the work themselves or by scheduling projects to maximize cash flow.
Depending on the age and condition of the home, investors may also be able to rely on higher-quality construction and a more traditional floor plan. Such features may appeal to certain demographics, particularly renters looking for a home with a unique look or feel.
Drawbacks of Older Rental Homes: Costly Updates and Maintenance
While the location may be a major advantage, older homes often come with several drawbacks, such as aging heating and cooling systems and the potential for expensive code compliance updates. Windows in older homes may contribute to higher energy bills and reduced temperature control.
Beyond these regular maintenance concerns, older homes often need costly updates to remain attractive to potential tenants, putting a strain on cash flow. Investors should be prepared for the potential financial burden of keeping older homes in rentable condition.
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.
Assessing Older Homes for Potential Issues
Thoroughly researching the neighborhood before purchasing is critical, as older homes are often located in areas where infrastructure issues may arise. Check for potential problems, such as water or sewer upgrades, that may come with additional taxes or fees.
Older houses are valuable investment properties but require comprehensive assessments. Old houses come with potential risks that investors must evaluate to ensure long-term profitability.
At Real Property Management One Source, 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 Frisco and nearby. We are dedicated to helping real estate investors make the best possible investment decisions. Contact us online or call 214-721-0727 for more information!
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.
