Do you want to invest in historic properties but are afraid of their past history? Do you dream of renovating a property to restore its glory like you see on HGTV? Learn why we invest in historic properties, what to look for when buying one, and how you can successfully invest in historic homes.
So, how old is historic?
First, let’s create a little context. How old does a house have to be to qualify as “historic”? Well, there is no universally recognized time period before a house is considered historic. In fact, many old house lovers will classify any old or vintage home as “historic.”
HouseLogic suggests homes older than 50 years can meet the criteria. The Canadian Historic Register doesn’t specify any time period. Instead, it defines a historic place as “a structure, building, group of buildings, district, landscape, archaeological site or
another place in Canada that has been formally recognized for its heritage value by an appropriate authority within a jurisdiction.”
For the purpose of this blog, I’m defining historic homes as those built before World War II or the 1940s. Unlike others, I am also not limiting my definition to those that have a formal, recognized heritage designation. Although if your property has either of these, keep reading because heritage plaques and districts may impact your renovation plans.
Also, because we’re investors this post focuses primarily on historic properties from an investment perspective because we feel historic converted multiunit dwellings deserve some love too.
The Benefits of Investing in Historic Properties
There are so many positive aspects of investing in historic properties. Here are just some:
1. Centrally located. Historic homes are often located in the best neighbourhoods, close to downtown. These are the original houses, in prime locations. They often have high walk scores and are steps to transit. As many cities experience downtown revitalizations, trendy cafes, shops, and services are popping up right around the corner. Revitalization and gentrification place these properties at the front of buyer and tenant demand.
2. Amazing architectural features. Stately, unique, and noticeable. These homes have features that you just don’t see in today’s homes. Soaring ceilings, incredible mouldings and baseboards, large front porches, and huge windows are all common. Each property is truly unique and this appeals to those who run away from cookie-cutter suburban homes.
3. Investor opportunity. Most importantly, historic homes are full of opportunity. As cities revitalize their downtowns, older landlords are beginning to sell off their historic multiplex properties to new investors. Why? Because in many Canadian cities, property values are at an all-time high. Older landlords are cashing out instead of renovating for the new millennial generation. This means streets of old, rundown Victorian and Italianate homes are getting fresh coats of paint and newly renovated kitchens.
4. Appreciation, appreciation, appreciation. Have you ever driven through Hyde Park in Toronto, Westmount in Montreal, or Shaughnessy Heights, Vancouver? Many of the wealthiest neighbourhoods in cities across Canada (and the U.S.) are also heritage neighbourhoods. This isn’t a coincidence. Information from many sources including HouseLogic and HistoricPlaces.ca shows historic homes hold their value better through economic downturns. Historic properties also see higher average appreciation than other properties, especially when located within a heritage district.
What to Look For When You Invest in Historic Properties
Currently, our “newest” property was built in the mid-1920s and our oldest property dates to the mid-1880s. From their quirky layouts to their beautiful wood trim and expansive windows, we’ve made renovating and maintaining these properties one of our passions. But there are some things you need to look for before finalizing your next property offer.
Outdated wiring, plumbing, and asbestos.
Wait! Don’t run away yet. Many old homes come with old, outdated building materials. If you’re new to historic properties words like knob and tube, galvanized pipe, lead paint, and asbestos might make you feel ill. Yes, these are a fact of life but they are not a death sentence. We have successfully dealt with each of the above.
By working with an experienced contractor, property inspector, and insurance broker you determine what you are dealing with, then make an action plan. Determine what needs to be remediated immediately, and what can stay. I promise you some can normally stay undisturbed unless you are gutting the property. Not sure? Ask the experts for their advice and recommendations.
Great layouts, or great potential.
Remember this is not new construction. You don’t need an open concept kitchen, ensuite bathroom, and walk-in closet. Many of our tenants love the historic character and are fully prepared to accept traditional or quirky units but make sure the layout makes sense. Ideally, you want bright sun-filled units, large or efficient spaces, and easy access.
Miniscule bedrooms without storage will be a challenge, as will extremely narrow doorways, stairwells, and hallways. When you are in kitchens and bathrooms look for chances to add additional storage or reorganize awkward layouts. Always bring a tape measure to verify head heights are legal and furniture or appliances will fit.
Also look for opportunity. Can you create an extra bedroom or office space or add some extra cabinetry and shelving? Can you re-imagine the layout and use it differently than the existing tenant? More than once we’ve reversed living rooms, dining spaces or bedrooms with other rooms when we stage for photos. By giving tenants options they see the amazing potential for making the unit uniquely their home.
Understand local heritage and conservation district regulations.
Before you purchase your first historic property, check to see whether it has formal heritage designation or is located within a heritage district. In London, we have eight – yes eight!- heritage districts. What does that mean? Simply put, the city has guidelines and regulations which are designed to preserve the heritage of these amazing properties. The good news? If you know about this in advance, many of these guidelines and regulations aren’t incredibly difficult.
In our city, the focus is largely on the streetscape and the front facade of properties, not the interior. And there are often grants available to help you maintain or restore your heritage beauty’s front facade. So with a little searching on your city website or a visit to city hall, you will then understand what you can and can’t do. Once you know you can plan renovations accordingly and maybe score some grant money in the process.
Still not sure? What’s holding you back?
If we can do it, you can too. You can invest in historic properties successfully and add them to your growing portfolio.
But if you are still unsure, feel free to contact us at Rethrive Properties with your questions. Or consider a Joint Venture with us so you can leverage our experience to make the learning curve quicker and easier.
If you do choose to invest in historic properties, please share your photos and successes with us, we’d love to see them!
Co-owner of Rethrive Properties, Kimberly is an e-learning developer, corporate trainer, experienced real estate coach, and content writer. As one of those quirky people who remembers endless details, Kimberly loves researching, reading, and exploring new ideas. Her mission is to educate others with creativity and integrity so they can, in turn, add value to those around them.