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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.

Investing in older single-family homes for rental property purposes can be a rewarding endeavor. However, it’s important to realize that there are several pros and cons to consider when choosing older homes over new constructions. For instance, older homes often feature a great location, lower purchase prices, and a more stable market rate, which can be very appealing to many investors.

But there are also downsides to buying an older home, including a higher cost of repairs and improvements, lower energy efficiency, and the risk of losing out on 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

Many benefits accompany the purchase of older homes for rental income. One of the most significant advantages an older home can provide is its prime location. Unlike newer homes that may be situated far from the area’s best amenities, older homes are frequently found within a short distance of desirable social and commercial areas.
For Millennial renters, young professionals, or seniors enjoying retirement, a rental home with easy access to the city center or other attractions can serve as a compelling draw. Older properties are often located in established neighborhoods, which tend to exhibit more predictable rental rates. The ability to accurately forecast rental income is one of the most substantial benefits of investing in an older home, allowing for more effective financial planning and investment strategies.

 

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

Older homes have numerous advantages, but there are also problems. Older homes may have obsolete heating and cooling systems, plumbing, and wiring difficulties.
These properties may also have code compliance issues, requiring costly repairs and renovations. Older homes typically have fewer energy-efficient windows than newer homes, which can lead to higher energy bills and make it difficult for renters to control the temperature inside the house.

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 higher upfront costs that result may put a short-term strain on your cash flow, making it important for investors to feel confident about funding repairs, big or small.

 

Assessing Older Homes for Potential Issues

The state of the neighborhood as a whole is another potential disadvantage of buying an older home. Gather extensive information on a neighborhood before buying. Watch for signs of neglect, which may predict future issues.
The area around your chosen property may need major upgrades like water or sewer line repair. A large special assessment or tax to the owner may be required immediately and may not have been budgeted for these projects. If the region is declining, property prices may seem low, but this may imply that the home’s future market value may not be as promising as thought.
Older houses can be great investment properties, but if not handled properly, they can deplete an investor’s funds. While older homes have numerous advantages over newer ones, careful evaluations and market assessments are vital to reduce repair and remodeling risks.

 

At Real Property Management Bella, 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 Perris and nearby. We are dedicated to helping real estate investors make the best possible investment decisions. Contact us online or call 951-916-4329 for more information!

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