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Real Estate
Should You Invest in Older or Newer Rental Properties?
December 2, 2020
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A choice between buying older or newer rental properties is a long-running debate in the real-estate community. And so, today, we’re going to jump straight into the facts to get an answer on whether investing in older or newer rental properties is a better idea.

What are the advantages of investing in older or newer rental properties?

Both property types come with their own sets of benefits. Let’s look at these advantages in detail to get a better understanding of which is a better investment given certain market conditions and neighborhoods.

The Pros of Investing in Older Rental Properties

Before investing in an older property, you should ask yourself – why should I invest in an older rental property? To answer that question, here are the key benefits of investing in older rental properties:

  • You get to purchase a property in a neighborhood with a well-established market. That is, you’d have easy access to the history of the property and the neighborhood itself to make a judgment call on how often you might find yourself without tenants.
  • In the case of older rental properties, it’s easier to gauge rent. Therefore, setting rents and accounting for expenses is much easier than a newer rental.

The biggest advantage of an older rental property is the fact that it will usually reside in a well-established neighborhood – close to important public locations. And so, you can rely on them to attract tenants due to the amenities the local neighborhood provides. Moreover, with an established community in the area, you’re likely to find tenants faster between turnovers. Finally, with older homes, you can gauge prices and rents before you put your house on the market.

The Pros of Investing in Newer Rental Properties

There are quite a few benefits you’ll come across when you’re in the market for newer rentals. Here are the major ones:

  • Newer rentals properties have access to better schools and colleges nearby as they are zoned for those schools
  • Newer properties come with better energy efficiency measures, making them more lucrative for potential tenants
  • With newer properties, you get longer contracts and fewer turnovers
  • In a growing neighborhood, a newer property will appreciate better over time

With these benefits in mind, newer properties are great investments if you find them in the right neighborhood with plenty of potential growth.

Conclusion

There are a lot more nuances between investing in newer or older rentals. When it comes down to a choice, there are markets, where investing in new rentals is not an option – you’ll only find older homes and properties. In other neighborhoods, you will normally see that even with newer properties in the market, there is no school nearby or shopping etc. Therefore, just like any other investment, you need to do your homework and decide on which deal is the best based on the current market climate, neighborhood, and your investing goals. In most cases, if the market is growing and you want to worry less about micromanaging an older home, investing in a newer rental property is the right way to go. On the other hand, if you want properties in key locations and bring in higher-quality tenants, opt for older rental homes in established neighborhoods.

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Richard Nevis

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