Thanks for the reply. The house is in an old neighborhood close to downtown Modesto. Doesn’t have any problem keeping rented. It has (2) 3/2 and (3) 1/1 units which all rent for 500 at present. These units are clean with lots of light and high ceilings. I think they should be renting for 600.00 at least. They are asking $315,000 for it. At 600.00 a unit, I should be positive after expenses, but not accounting for management. That’s why I’m concerned about appreciation. If I’m not making money on managing them, then what’s the use if there is not something in it down the road. I’m not really making money on it if it doesn’t appreciate in value over the years, unless when the rents are raised in time. But I think about the age of the house and how many years it has left. In this part of California, it’s difficult to find any multiunits that even come close to breaking even. And sellers usually get their asking price or even a bit more within a week after their properties hit the market.
The neighborhood is composed of houses built in the same time period, yet this one is much larger than anything else on the block. All the other houses are 1 story, single family homes, while this one is two stories. Behind is an alley, with other apartments accross from it.
The owner of the house bought it two years ago, and is selling because he lives in San Francisco, so he says. It was sold, but the deal has fallen through and is back on the market again. It needs about $16,000 in work to bring it up to codes, the foundation needs to be raised higher above the ground level. I might be able to do this myself, and offer $290,000 for the house “As Is”.
I am considering buying my first investment property in Central California. I found an old Victorian style home which was converted into a 5 plex in the 70s. The home was built in 1890, so my concern is with the age of the property. It seems well kept, new roof, copper plumbing and wiring. The cash flow analysis is the best I’ve seen for this area, about break even when I raise the rents a little (they are a little low). I’m in it for the long run, but I’m concerned with how a property this old will/or will not appreciate. Also, could there be a risk of the county condemning the property.
I’m thinking of going down to the county code inspectors and talking with them about it, and possibly hiring a contractor to inspect for dry rot if I make an offer on it (a condition that I will include in the contract).
Any advise on buying older buildings and what to be concerned about would be much appreciated.
Re: Buying an Older House - Posted by michaela-ATL
Posted by michaela-ATL on January 06, 2003 at 07:46:33:
Gary,
I have specialized in old victorians and they can be pretty expensive, but if roof, electrical and plumbing are done, then i would think the seller has spent some money to keepit in shape.
As to value - a lot of it depends on the neighborhood. What’s around it? Is this in the middle of other victorians? maybe a historical area? then it would probably be a desired neighborhood and appreciate in value, provided the other victorians are renovated as well. If it’s the only victorian in the middle of brick ranches, then things might be dicey. Even though a victorian has charm, people looking in the area are obviously looking for brick ranches. Just like a brick ranch in the middle of victorians would not fare well.
As to rental - if it’s only going to break even after rent increases, then it doesn’t sound like a great deal. Your want positive cashflow. On the other hand, if you’re in the middle of san francisco and have breakeven, then you could probably turn around and sell it to someone, who would be happy with a small negative cashflow, compared to the big negative cashflow landlords ther enormally have.