Are you considering buying an older property but unsure if it’s the right decision? Older properties possess a unique charm and aesthetic that attract many people seeking an investment opportunity.
However, these properties often have hidden issues that may be out of plain sight. These problems can quickly eat into your budget if you’re not prepared for them.
Here’s how you can protect your investment and property before signing the papers.
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Don’t Rely on the Eye Test Alone
A fresh coat of paint can hide a lot. Just because a property looks structurally sound does not mean it is. Older buildings have aging systems (like plumbing and wiring) that can’t be seen until they fail.
According to the Department of Energy, 55% of commercial buildings in the U.S. were constructed before 1980. This also means that they might not have undergone any significant changes, which could become a problem at any moment.
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Look for Hidden Structural Issues
Over time, foundations settle, walls crack, and moisture accumulates. In older properties, these issues are typically patched up for the time being rather than being completely resolved.
However, as a first-time buyer, you won’t be able to identify these issues on your own. That’s why it’s important to hire a qualified inspector who knows what to look for in an older property. Sagging floors, leaning chimneys, or bowing walls might seem minor until you get the repair estimate.
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Order a Property Condition Assessment Before You Close
One of the best ways to avoid financial surprises is to schedule a property condition assessment. This is especially important if you’re buying a commercial or multi-unit building. Even savvy residential buyers are now requesting these services.
This assessment goes beyond a basic inspection. It evaluates the overall physical health of the building and identifies both repair needs and long-term capital investments. Think of it as a roadmap for what your property will likely need in the next 5 to 10 years.
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Be Aware of Environmental and Safety Issues
Old properties were often made from hazardous materials, including lead paint for the walls, asbestos for insulation, and even radon in some areas. At that time, it was considered a normal practice.
However, based on current standards, these are serious code violations. Before purchasing, ensure the property has undergone environmental testing. And don’t go buying such properties for cheaper, as these hazards are quite expensive to mitigate.
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Budget for the “What Ifs”
Even with the best due diligence, surprises can still occur. Perhaps during renovations, you may discover a hidden plumbing issue or a broken beam.
It’s better to set aside 10 to 20% of your initial renovation budget for these surprises. This way, you’ll have a property that complies with regulations and won’t even cross your pre-defined cost.
Summing Up
Buying and renovating an older property can be a great investment, thanks to the durability of the materials used in the late 20th century. However, without proper planning, it could also turn into a financial drain.
So, do your homework, hire the best inspectors, and conduct a deeper analysis than just a surface-level walkthrough.
