Sunday, March 14, 2010

Historic Homes

Historic home question:

I think you mentioned in the past that your rental properties are historic... what are the challenges and benefits to owning historic versus non-historic properties, and what caused you to choose historic? (Example of a potential challenge: An experienced real estate investor depicted on a television program was preparing to remodel the historic home he had just purchased, only to find out that the project required approval by a local gov't agency... and ultimately his original plans were modified to accommodate their requests.)

Our primary home, rental #2, and rental #3 are all historic homes, built in the 20s and 30s. My prior home was also historic.

We ended up with two historic rental homes mostly by chance. Our home is historic and we live in a historic area (mixed, there is some 50s, 70s and newer construction too). When we were shopping for rental homes we wanted homes close to us (easier to manage, easier to work on) and we wanted the best bang for our buck. Historic homes that have not been dramatically upgraded are generally cheaper than similar size newer construction homes. We can cover the mortgage if the rental home is empty without too much pain and we don't have to charge as much for rent (very helpful in this economy).

But there are also negatives. First, insurance for a historic home is more expensive (big issue here in Florida). Second, historic homes can be more difficult to maintain, repair, etc. Third, when it comes to selling, I think historic homes generally sell for more (better profit) but appeal to a more limited segment of the population. And finally, yes, the historic preservation board can limit dramatic changes to the property (since we don't plan to add an addition or second floor, etc., this is not a big issue for us).

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