Historic homes are full of personality and charm—the decorative trim, the antique moldings, the mature landscaping and often much more. A historic designation can pique a buyer’s interest and make the property you’re considering flipping a hot commodity.
But, let’s be honest, a historic house is an old house. And, with age, comes the potential for big problems and costly solutions. So, before you pull the trigger on that dilapidated Victorian or crumbling Craftsman, it pays to do a little digging.
Know The Rules
Depending on the type of historic designation—federal, state or local—there may be significant restrictions regarding the changes that can be made to a home. To find out the specifics within your neighborhood, contact your state’s historic preservation office (SHPO). There could be fairly straightforward rules regarding the exterior colors or materials used, or the rules could extend to the interior of the home as well. Sometimes the worst (and most time-intensive) part of the process is gaining approvals for planned changes from the historic board. Be sure to incorporate the lengthy permit process in your Scope of Work to ensure a practical timeline for your contractors.
The Home Inspection Is Critical
In a previous post, we delineated the reasons why you never want to skip the home inspection when buying a property to flip. It stands to reason that, with an older, historic home, the inspection takes on even greater importance. Older homes have more potential for system-wide breakdowns such as a leaky roof or faulty wiring. A good inspector can peek behind the walls to see just what’s in store for an intrepid rehabber.
Beware of Asbestos
One of the things that you definitely don’t want the inspector to find is asbestos. What is asbestos, you may ask? A common building material in the early 20th century right up until the 1980s, asbestos is now known to be carcinogenic. When asbestos fibers are disturbed and become airborne, they pose a huge health hazard to everyone within breathing distance. Clearly, this is a major problem for house flippers since asbestos removal requires specialized remediation. Cha ching!
Old Pipes Could Be A Big Problem
Beyond asbestos in the walls, the home’s plumbing may pose a health threat as well. You know the old saying—what you don’t know, won’t hurt you? Well, that isn’t necessarily true when it comes to outdated plumbing. Lead poisoning can be a serious (and costly) problem when older pipes corrode. Be sure that your home inspector knows the signs and can give you a heads up before you sign on the dotted line.
Be Prepared for Anything
The bottom line, when it comes to flipping a historic home, is to expect the unexpected. Aging systems and well-worn fixtures can lead to significant headaches for the unsuspecting real estate investor. Here at Navigator Private Capital, we require our clients to put aside 15% of their repair budget into a cash reserve to cover any unforeseen contingencies. With older homes, this cash reserve becomes even more critical.
Are you considering flipping a historic home? Need some expert advice? Reach out to us at 443.603.0193 or at info@gonavcap.com to discuss the ins and outs of our flexible financing arrangements. To get the ball rolling, fill out the pre-application on our website or, if you already have the house under contract, go ahead and complete the full application to ensure fast approval.