Investing in older single-family homes to be utilized as a rental property can be a successful strategy. In any case, always know that some numerous pros and cons go with choosing older homes instead of the newer ones. For instance, older homes frequently offer a great location, lower purchase price, and a more stable market rate. Be that as it may, there are likewise drawbacks to purchasing 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 scouting for your next investment property in Toronto, both the pros and cons ought to be considered carefully before making any final decisions.
Advantages of Investing in an Older Home
There are numerous advantages to purchasing older homes to use as rental properties. Maybe one of the greatest strengths an older home offers is the location. Not the same with newer homes that are usually situated a long way 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 hoping to make the most out of their retirement, a rental home with simple access to the downtown area or different attractions can be a solid draw. Older properties also are usually found in established neighborhoods, which commonly have more predictable rental rates. Having the option to reliably forecast your rental income is one of the most significant benefits of buying an older home.
In many areas, older homes offer the advantage of being more affordable than new construction. This can altogether lower the upfront cost of the property and allow investors to control what amount is spent on any improvements or upgrades. While an older home will probably 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 upon the age and condition of the home, investors, may likewise be able to depend on higher quality construction and a more conventional floor plan. Such highlights may spark interest in specific demographics, particularly renters looking for a home with a unique look or feel.
Drawbacks & Disadvantages of Investing in an Older Home
While these advantages can make older homes an attractive option for investors in Toronto, there are also some drawbacks. Older homes tend to have outdated heating and cooling systems, plumbing and wiring problems, etc. 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 bear the risk of expensive updates and improvements to make the home both safe for occupants and attractive to potential tenants. The more expensive upfront costs that result may put a short-term strain on your cash flow, making it crucial for investors to feel confident about funding repairs, big or small.
Another potential disadvantage of buying an older home could be the way the neighborhood was organized. It is critical to gather detailed information on a neighborhood before deciding to purchase there, checking cautiously for signs of neglect. More often than not, the area in which the home you select may be due for a water main or sewer line upgrade, and these projects, for the most part, come with a hefty special assessment or tax to the owner that can be due immediately. On the off chance that the area is in decline, property prices may be low but so too might be the home’s expected future market value.
Speak with A Professional Property Manager
Older houses can make excellent investment properties; however, they can also become a drain on an investor’s finances. Even if old houses offer many features that newer homes do not, careful evaluations, and market assessments are an absolute necessity. At Real Property Management Service, we can help investors evaluate and vet potential rental properties as well as provide a point by point information about the home’s neighborhood and the current state of affairs in regards to the rental market in Toronto. We are genuinely devoted to helping real estate investors make the best possible investment decisions. Contact us online or call 416-642-1404 for more information on how we can help you.