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

Two Garage Brick House in WatertownInvesting in older single-family homes for purposes of using it as a rental property can be a successful strategy. But it is not always as easy as it may sound; some several pros and cons come with selecting older homes in preference to new ones. For instance, older homes often offer a great location, lower purchase price, and a more stable market rate. But there are also downsides to buying an older home, and that includes 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 in Watertown, both the pros and cons should be considered carefully before making any final decisions.

It is a known fact that buying older homes to use as rental properties has several benefits, and probably one of the most meaningful benefits an older home offers is the location. Not like newer homes that tend to be placed far from many 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 who want to make the most out of their retirement, a rental home with excellent access to the downtown hub or other attractions can be a solid draw. Older properties also tend to be located in reputable neighborhoods, which usually have more predictable rental rates. Being able to reliably forecast your rental income is one of the most significant benefits of buying an older home.

In a lot of ways, older homes give the benefit of being more affordable than new construction. This can radically lower the upfront cost of the property and allow investors to govern over the amount that is spent on any improvements or upgrades. Even though an older home will possibly require some work, investors can control costs by choosing to do some of the work themselves or by scheduling projects to maximize cash flow. Contingent on the age and condition of the home, investors, may also be content to trust on the higher quality construction and a more conventional floor plan. Such highlights may appeal to different demographics, particularly renters looking for a home with a unique look or feel.

While these benefits can make older homes an attractive option for investors in Watertown, 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 carry the possibility of expensive updates and improvements to keep the home both safe for occupants and attractive to potential tenants. The pricier upfront costs that result may put a short-term strain on your cash flow, making it critical for investors to feel confident about funding repairs, big or small.

Additional potential disadvantages of buying an older home possibly will be the structure of the neighborhood. It is essential to gather complete data on a neighborhood before buying there, inspecting prudently for signs of neglect. Many times, the area in which the home you choose may be due for a water main or sewer line upgrade, and these projects typically come with a hefty special assessment or tax to the owner that can be due instantly. If the area is in decline, 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 also become a drain on an investor’s finances. Although old houses offer many features that newer homes do not, careful evaluations, and market assessments are an absolute necessity. At Real Property Management Commonwealth, we can help investors evaluate and vet potential rental properties as well as provide detailed information about the home’s neighborhood and the current state of affairs in regards to the rental market in Watertown. We are genuinely dedicated to helping real estate investors make the most beneficial investment decisions. Contact us online or call 617-299-2342 for more information on how we can help you.

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