If you’ve spent any amount of time looking at properties to invest in, you know how many options there are and how difficult it can be to choose. While every experienced investor has their opinions on what to look for, no subject is more divided than the topic of new versus old rental properties. If you’re struggling to decide what to invest in, read on to learn the benefits and drawbacks of each.
The Pros and Cons of Older Rental Properties
Part of what draws people to older properties is their comparatively low average purchase price, which makes sense. Newer properties come with shine and expensive upgrades, while older properties have already depreciated from being lived in. This doesn’t mean the property is destitute or in disrepair. It means that the building is established, the foundation has settled, and the rental prices and trends are already set. Additionally, the rising cost of housing materials caused some companies to cut corners, and while it may seem counterintuitive, older homes are often more solid and built better.
However, depending on how old the property is, you may need to do some serious updates on things like plumbing and electricity. For example, historic homes will need a lot of renovation and may even have structural issues that can be hazardous. With maintenance issues already being one of the most common rental property expenses, you may be paying double the usual maintenance fees to keep the property updated.
The Pros and Cons of New Rental Properties
The best part about new rental properties is that nothing needs to be done to them as they are set and ready to move into. Not only that, but they likely won’t need maintenance for a longer period. If you’re looking to save and make money fast, a new property can help you do that. Also, many tenants don’t want to deal with the issues that come with old properties either and are often looking for newer, more modern homes. With newer properties, the quality of the home will do a lot of the marketing legwork for you.
Unfortunately, new homes cost more– a lot more. Not only will your initial investment be higher, but how much you’ll have to charge will be higher too, and tenants can’t always afford that. Newer properties are also much more vulnerable to the swaying of market trends and may not have the same equity that older, established properties have. It’s much harder to tell if a newer area will go under market-wise, and buying a new property comes with that risk.
Which Investment Is Right for You?
In terms of old versus new rental properties and what’s “better,” the answer is neither. It depends on what you want to get out of your property and what your resources are. Older houses are great for people who want to flip a home or need a market and income they can rely on. Newer houses are better for those who don’t want to deal with maintenance and want to make money fast. It all depends on what your budget is and the kind of money you need to make.