What are some of the common issues found in older properties, and can they still be good investments?
Fix and flip investors often acquire older properties, which can bring a host of their own issues.
These properties can have a lot of character but also underlying problems the investor will need to tackle. Older properties might have been built to different building standards, make use of hazardous materials or have ageing infrastructure dangerous to occupants.
These problems can have a significant effect on the length and cost of the flip, but with the right approach, they can be overcome.
Pipes and Wiring
The most common issues found in older homes are related to plumbing and electrical work. Many of the properties built pre-1970s made use of galvanized pipes for plumbing at the time, but these have been found to corrode quickly and need replacing often. Fix and flip investors who find galvanized pipes in their property are highly recommended to replace it with a modern solution like copper or PVC which is more long-lasting. Electrical issues are also common, and will likely need to be brought back up to code prior to selling the home.
Outdated wiring is a dangerous fire hazard, and also typically not compatible with the appliances found in the home today. For this reason, it’s best to have an electrician inspect the property and make suggestions.
Certain building materials used in the past have since been exposed as unsafe for human contact. Hidden throughout an older property there may be lead paint, asbestos flooring, popcorn ceilings and other lurking dangers. If these materials are disturbed during the renovation process, it can quickly become hazardous to contractors and occupants. Fix and flip investors can test for some of these materials themselves and use a professional to detect or remove the rest.
Removing these materials from the property can be pricey – removing asbestos materials alone can cost between $200 to $700 per hour. However, the cost is an essential part of your investment for such a property and peace of mind.
Questionable Building Standards
Older properties, having had more owners, are likely to have had previous renovations done. If the property has been maintained well, only basic fixing may be needed. However, with changing building standards over the years, it can be difficult to establish the quality of previous renovations. It’s best to have a property inspector review the property to identify anything not up to modern standards and advise next steps.
Fix and flip investors should also put aside a contingency fund up to 20% to tackle these issues.
Properties constructed in previous decades may have made use of materials not commonly found today. This can be challenging for investors who want to restore these materials rather than replacing them. To keep the character of these features, investors should try checking centers that offer reused materials or consult with local remodeling professionals to source them. This method can be expensive, and investors can also turn to modern replicas of the original features for the same effect.
For example, wooden floors can be replaced with laminate that looks similar but is more affordable. It’s best to compare the costs of both solutions before deciding on a final plan of action.
Older properties make great fix and flip investments, but it’s also expected that some hard-to-deal-with issues will come up. Some properties built a few decades ago have safety hazards lurking under the surface which need to be addressed. Fix and flip investors will come across dubious building standards and should budget accordingly for the cost of these “surprises.” Investors targeting older homes get to benefit from lower acquiring costs, and with the right approach, the investment property can bring good profits, no matter its original age.
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