Although some investors prefer finding new construction, there are many benefits to investing in older buildings. Reclaiming an old building can be more environmentally friendly , and saving old architecture preserves the culture and character of an area.
Preserving a building comes at a cost, but getting a good return on your money is possible. From the initial purchase to the final coat of paint, here are 15 tips to help transform a historical marvel into a profitable investment.
1. Profit Starts with Research
Researching and conducting proper due diligence on an older building, based on sales comparables, can also help you determine its worth so you don’t end up overpaying. Many older buildings also come with funding options and rehab incentives at the state and federal levels, such as rebates, tax credits, and low-interest loans. Research which you might qualify for.
2. Get a Historical Value Assessment
Just because a building is old doesn’t mean it’s historical. Get a value assessment to determine if it has historical significance. If a building is historical, it’s critical to research potential roadblocks to making changes to the exterior. Strict restoration guidelines can impact your return on investment.
A historical value assessment can also help you determine how much money you can make on a flip. Too many restrictions mean costly updates that eat away at profits.
3. Assess the Structure
Hire an expert to thoroughly inspect the building for problems with the foundation, the roof, the interior walls, and the systems. Very few older buildings are without issues, but if you plan on flipping the structure, significant problems can severely impact your return on investment. That’s not to say you shouldn’t pursue an older building, but going in with your eyes wide open is always the best strategy.
4. Use Cash
Borrowing money will cost you. When possible, buy an older building with cash. Doing so minimizes interest costs on even a short-term mortgage. Cash is also king when bidding in a competitive market. Sellers may be more inclined to go with a cash offer, especially if it will speed up the sale.
5. Negotiate Rates
Closing costs and realtor commissions can take a big piece of your budget. Remember this when negotiating rates, as the more you can save, the more money you will have to spend on the renovation.
6. Choose What to Renovate Carefully
To maximize your profit, focus on updates that will bring you the best return on investment. Kitchens and bathrooms are often the most popular renovations among buyers, but you also have to get them in the door – which means you can’t neglect exterior improvements. Simple improvements, such as updated landscaping, a new front door, and modern house numbers, go a long way in getting buyers interested in your older building.
7. Consider Adaptive Reuse
In some cases, it doesn’t make sense to restore an older building. Instead of tearing it down, consider adaptive reuse: updating the building to suit a new purpose. For example, an old tobacco warehouse could become an art gallery or a distillery with a tasting room.
8. Integrate Modern Amenities
Old buildings can be drafty, creaky, and challenging to utilize comfortably. Installing modern amenities — such as new windows, new heating and cooling units, smart sensors, and updated security systems — enhances a building’s appeal and increases its market value.
9. Go Green
Energy-efficient upgrades are one way to bring your old building into the new millennium. Adding high-quality windows, better insulation, new appliances, and Energy Star-certified heating and cooling systems means savings on utility costs. These upgrades can also be a great way to market to environmentally conscious buyers.
10. Get Smart
One major appeal of new construction is that smart features are often built into new buildings. Smart-home technology and building automation systems are convenient for investors and tenants. They reduce operation costs and manage energy consumption when installed in older buildings. Additionally, smart locks and remote thermostat controls help keep the building safe and comfortable when owners and residents are away.
11. Make it Look Pretty
Adding modern aesthetic touches to an older building balances the charm of a bygone era with the clean lines and palettes of today’s real estate. Updating the look of a building can be as simple as repainting rooms or replacing fixtures. Upgrades can even extend outside with new modern landscaping features.
12. Highlight Old-World Charm
The beauty of an old building lies in its unique architectural features. Exposed brick walls, original hardwood floors, intricate moldings, and unusual exterior trim can be retained and highlighted when you market to prospective tenants.
13. Increase Safety
Older buildings often passed safety standards with a wink and a nod. Upgrade to current building codes with new electrical systems, smoke detectors, and suitably located fire exits. It’s the law, but it’s also a selling point that protects buyers and tenants.
14. Build Universally
Universal building means adapting a property to be accessible to everyone, regardless of physical capabilities. This widens your potential pool of buyers or tenants because it allows people of all abilities to use the building.
15. Add Community Amenities
Consider adding community amenities to transform old apartment buildings into places that feel more like modern homes. These amenities include creating an outdoor gathering space, investing in a building-wide recycling program, adding a fitness center, or incorporating business services, such as docking stations and package delivery systems.
The Bottom Line
Transforming an older building into a desirable, modern property takes creativity and perseverance. Investors must strike a delicate balance between historic preservation and modern convenience, and they must also understand what the local market needs.
With a bit of care and thoughtfulness, these often overlooked properties can become a highly profitable investment in the right hands. It’s work worth doing. Preserving a varied tapestry of architectural styles gives each area its character and beauty.
Source: 15 Tips for Transforming Old Buildings Into Profitable Investments
https://www.creconsult.net/market-trends/15-tips-for-transforming-old-buildings-into-profitable-investments/
