Fix and flip investors are often familiar with older character homes which have features not typically found in newer builds, whether they wanted to take them on or not! Older homes can be great investments, but with an older property, costly issues and underlying problems are also an unfortunate reality many come across, which may affect the overall time and expenses needed to finish the renovation.
When purchasing an older home, investors should plan ahead and set a portion of their budget aside for any potential problems needing immediate attention. The question is, what would some of these problems entail? These are some of the most frequently occurring issues and hazards of flipping older houses that you should know about:
Plumbing And Electrical
In many older properties, electrical and plumbing issues are some of the most common investors come across. In terms of plumbing, older properties built before the 70s often used galvanized piping, which has since been found to corrode more easily over time compared to modern counterparts amongst other issues. This means that if galvanized pipes are found in a home during the renovation process, the flipper should seriously consider putting in replacements made of copper or PVC even if the older pipes are still in working order before they become a problem.
When it comes to electrical wiring in older properties, these will definitely need to be checked for safety hazards and brought up to code as required by modern standards. Often it becomes the case that older properties will need to have upgraded wiring to be able to support many of the appliances found in the modern home today.
Hunting For Unsafe Materials
Properties built several decades ago could also have a variety of unsafe materials hidden in throughout the original structure, such as lead in the paint, popcorn ceilings, asbestos in the flooring or others. These materials, left undisturbed, pose less of a threat, but if any part of the property’s renovation will require physically affecting these materials it can quickly become hazardous. These unsafe materials can be costly to get rid of – for example, on average, asbestos removal can cost anywhere from $200 to $700 per hour.
Flippers owning older properties can test for lead paint themselves, but these other materials may need to be identified and removed by a professional. Lead could also be hiding in the plumbing, as older homes built before a certain period all had lead pipes. Certain US homes built before 1995 sometimes have pipes made of polybutylene plastic, which has also since been linked to specific issues and should be replaced sooner rather than later.
Bad Renovations
Older homes are more likely to have changed hands a few times, which means multiple changes will have been made to the original structure. If the property has been well-maintained, there should be no problems other than basic upkeep here. But sometimes, as a flipper purchasing an older property, it’s typically not possible to know the exact track record of previous renovations, or to what standards they were done.
For this reason, it’s best for flippers to budget more time and money for renovations than originally planned. Real estate experts suggest setting aside an estimated 15% to 20% contingency fund for unexpected renovation issues that come up.
Difficult-To-Source Materials
Many homes constructed in the past subscribed to different building standards, but also used materials not as commonly found today. In order to keep the property’s character while renovating, it can be difficult to find the exact materials originally used. To find matching materials, try checking reuse centers, or consulting with a remodelling professional.
However, sourcing these materials can be an expensive and timely process. For some of these materials, modern alternatives could exist which look similar but are less expensive to add, such as laminate which imitates hardwood flooring. Explore these options first and compare the overall cost to find the solution best suited for the project.
Unknown Unknowns
Older properties can hold great fix and flip potential for investors, but care should be taken when selecting a home which is advanced in years. Renovations of older homes often uncover issues which will need to be addressed by the flipper to avoid safety hazards and future maintenance problems. These properties could also come with unforeseen pitfalls in the form of a spotty renovation track record, and difficult-to-source architectural features and fixtures.
At the end of the day, with the right care, older homes can still make a good fix and flip opportunities to the right investor.