Investing in older single-family homes to be converted into a rental property can be a successful strategy. Despite that, there are a great number of pros and cons that can occur with choosing older accommodation in preference of brand-new ones. Amongst others, older homes usually have a great location, lower purchase price, and a more stable market rate. But there are also dilemmas when procuring an older place, like a higher cost of repairs and improvements, lower energy efficiency, and the risk of losing out on widespread renter appeal. When seeking for your next investment property in Scottsdale, both the pros and cons have to be considered carefully before making any final decisions.
There are extensive benefits to obtaining older homes to use as rental properties. Feasibly, one of the major upsides an older home has is the location. Unlike newer homes that are most likely found a distance away from a great number of the area’s best amenities, older homes can often be found within a short distance of desirable social and commercial areas. For Millennial renters, young professionals, or seniors eager to begin their retirement, a rental home with quick access to the city town or different areas can be a strong temptation. Older assets are also inclined to be located in esteemed neighborhoods, which conventionally has more predictable rental rates. Being skilled to be able to reliably forecast your rental income is one of the most fundamental benefits of operating an older home.
In countless places, older homes deal with the benefit of being more affordable than new construction. This can greatly lower the upfront cost of the property and allow investors to decide how much is spent on improvements or upgrades. Although an older home will seemingly need work done, investors can control costs by choosing to do some of the work themselves or by scheduling projects to maximize cash flow. Hinging on the age and condition of the home, investors can rest assured knowing that the home will have quality construction and a more common floor plan. Such highlights may entice certain demographics, particularly renters looking for a home with a unique look or feel.
While these advantages can make older homes an attractive option for investors in Scottsdale, there are also some drawbacks. Older homes tend to have outdated heating and cooling systems, plumbing and wiring problems, and so on. 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 will likely need expensive updates and improvements to make the property both safe for occupants and attractive to potential tenants. The more prominent upfront costs that occur may present a short-term strain on your cash flow, making it consequential for investors to feel reassured about funding repairs, big or small.
Other potential disadvantages of buying an older home could be the area of the neighborhood. It is fundamental to gather detailed information on a neighborhood before buying there, monitoring prudently for signs of neglect. Frequently, the area in which the dwelling you select may be due for a water main or sewer line upgrade, and these projects primarily come with a hefty special assessment or tax to the homeowner that can be expected to be paid immediately. If the locality is being neglected, property prices may be low but so too might be the home’s expected future market value.
Older houses can make excellent investment properties, but they can likewise put a severe strain on an investor’s finances. Notwithstanding that, old houses present a collection of features that newer homes do not, so careful evaluations and market assessments are an absolute necessity. At Real Property Management East Valley, we can help investors evaluate and vet potential rental properties as well as offer elaborate data about the home’s neighborhood and the current state of affairs in regards to the rental market in Scottsdale. We are sincerely committed to helping real estate investors make optimal acquisitions. Contact us online or call 480-981-7000 for more information on how we can help you.
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.
