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Pros and Cons of Investing in an Older Home as a Rental Property

A charming older brick home with a spacious driveway and a lush garden in front. Purchasing older single-family homes with the intention of renting them out can be a profitable endeavor. When choosing older homes over new construction, it’s important to understand that there are a few pros and cons to take into account. Older homes, for instance, often have great location, lower purchase prices, and more stable market rates, which attract to a variety of investors.
Nevertheless, buying an older house has several drawbacks, such as increased maintenance and upgrade expenses, possible decreased energy efficiency, and the possibility of reduced rental 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

Buying older homes to utilize as rentals has several advantages. The location is arguably one of the most significant benefits an older home provides. Older homes are frequently located close to desirable social and commercial areas, as opposed to newer homes, which are frequently located further away.
For Millennial renters, young professionals, or elderly wishing to enjoy their retirement, a rental home with convenient access to the city center or other attractions can be a big lure. Older properties are also found in established neighborhoods, usually with more predictable rental rates. One of the most significant benefits of buying an older home is the ability to forecast your rental income with accuracy.

 

In many areas, older homes offer the benefit of being more affordable than new construction. This can considerably lower the upfront cost of the property and give investors control over the amount spent on any improvements or upgrades. While an older property will most likely require some maintenance, investors can control costs by performing some of the work themselves or scheduling improvements to maximize cash flow.
Depending on the age and condition of the home, investors may be able to expect higher-quality construction and a more traditional floor plan. Such characteristics may appeal to specific demographics, especially renters seeking a home with a unique look or feel.

Drawbacks of Older Rental Homes: Costly Updates and Maintenance

While these benefits might make older homes appealing to investors around the country, there are also negatives. Inefficient heating and cooling systems, as well as plumbing and wiring issues, are common in older homes. They may also have code compliance issues, which can be expensive. Windows in older homes are frequently less energy efficient than newer ones, resulting in higher energy bills and making it difficult for renters to control the temperature inside the home.

 

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 larger initial costs may put a short-term strain on your cash flow, so investors must feel comfortable supporting repairs, large or little.

 

Assessing Older Homes for Potential Issues

The nature of the neighborhood could be another potential disadvantage of buying an older home. Before buying in a neighborhood, it is critical to gather extensive information on a neighborhood and look for signs of neglect.
Many times, the region in which you choose a property is due for a water main or sewer line upgrade, and these projects frequently come with a significant special assessment or tax to the owner, which can be due immediately. If the area is deteriorating, property prices may be low, but so may the home’s estimated future market value.
Older houses can be good investment properties, but they can also deplete an investor’s funds if not properly handled. Although old houses have many advantages over newer homes, rigorous appraisals and market assessments are required.

At Real Property Management NC East, we can help investors evaluate and vet potential rental properties, as well as provide extensive information about the home’s neighborhood and the local rental market in Wilmington and the surrounding areas. We are committed to assisting real estate investors in making the most informed selections possible. For further information, please contact us online or call 252-298-5151!

 

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