Is This a Good Strategy or Too Risky..?

[Nir]

Hi All,

I wanted to ask what you think about the following strategy:

Purchasing VERY OLD Multi-plexes (100 YEARS OLD!) with Superb Cap rates 8-10%.

Is this strategy too risky due to the age of the properties?

Obviously, a detailed home inspection is done prior to each purchase.

I`m interested to know your opinion before owning "too many" of the above

Any comments would be highly appreciated.

Thanks and regards,
Neil

 

[housingrental]

See last email. Make sure that you properly account for management, both regular and periodic maintenance (ie plumbing seal, basement leaking, rotting wood replacement, wood repainting, roof replacement) and aesthetic upgrades to keep the place marketable (kitchens, baths, flooring, paint, clenaing, landscapping) and that you have a realistic idea of actual collected rent (ie if there`s contracts in place for $2500/month will you actually get this from the tenant each month?)
Ie. there`s a property for sale right now around Waterloo with a cap rate advertised above 10%, but you`d have a difficult time actually obtaining anything near it when you factor in maintenance and uncollected rent.


QUOTE (investmart @ Jun 16 2008, 01:59 AM) Hi All,

I wanted to ask what you think about the following strategy:

Purchasing VERY OLD Multi-plexes (100 YEARS OLD!) with Superb Cap rates 8-10%.

Is this strategy too risky due to the age of the properties?

Obviously, a detailed home inspection is done prior to each purchase.

I`m interested to know your opinion before owning "too many" of the above

Any comments would be highly appreciated.

Thanks and regards,
Neil

 

[FayWong]

QUOTE (investmart @ Jun 15 2008, 11:59 PM) Hi All,

I wanted to ask what you think about the following strategy:

Purchasing VERY OLD Multi-plexes (100 YEARS OLD!) with Superb Cap rates 8-10%.

Is this strategy too risky due to the age of the properties?

Obviously, a detailed home inspection is done prior to each purchase.

I`m interested to know your opinion before owning "too many" of the above

Any comments would be highly appreciated.

Thanks and regards,
NeilI have never owned an old property as an investment, but I love old houses and live in one that is 80 years old. As rentals if it looks really really good and has been modernized as far as plumbing and electric and is in a good location (the areas reputation is important here)there is a high end market among people who like old buildings and will treat it well. But if it is not a fully modernized good looking place you get the people on the other side of the spectrum and the building will go down hill real fast. Depending on the details an old place can be a winner, or a money pit, or even a potential slum building. Be very very cautious