 |
| #14 Lincoln from the front |
 |
| #14 rear cottage |
 |
| #14 |
 |
| #20 Lincoln from further down the road |
 |
| #20 Lincoln from the back |
 |
| The garage and shared driveway for the properties |
 |
| View of the two Victorian houses from the back of the lot |
This is also my first blog (OK only ten years behind the times :) ) so it will be a learning process for that as well.
November 2013
We have been considering getting a rental property for a while as a way to diversify a bit from the volatilities of the markets, and with an eye to creating an income stream as part of pension planning. With interest rates at crazily low levels, and the volatility of stocks in recent years, having some more stable form of income seems an attractive option.
We spent some time looking at various opportunities in our own town and neighboring ones, came close to buying one in Norwalk in 2012 before realizing the headaches that would come with it.
Almost by luck we found this opportunity in Westport, after passing them and seeing a for sale sign on a dog walk.
There are three houses on the site, all are two family homes for a total of six units. The two houses at the front are virtually identical Victorian Colonials built around 1900. The house at the back used to be the garage or carriage house for one of the houses and at some point was extended and converted into residential accommodation. It's probably of a similar age or a bit younger.
The houses were owned by the previous family for over 40 years and passed from father down to sons and daughters. The last work done on them of any consequence was probably around 40 years ago as well so there is plenty to do to bring them up to modern standards.
The purchase over October / November went pretty smoothly - the due diligence (surveys and inspections) suggested the houses were by and large in decent structural shape given their age, and that the apartments were legal (not a given in these parts as many multifamily properties are often illegal in terms of either their location in the wrong residential zone, or because they have jammed too many apartments into what is legally allowed).
The houses are in a great location - a quiet residential area in a good popular town where there are a limited number of quality rental properties and a restricted amount of space for expanding. People want to move here for the schools or to get out of New York at a certain point in their lives; or because locally there is a thriving job market in a 25 mile radius.
So we took the plunge in November and went ahead and bought the properties with the goal of upgrading them to a modern standard. The one catch at the start was that they came with incumbent tenants (apart from one very dilapidated apartment at #14). Luck was on our side however - the only tenant in #14 left in early December so work could start in earnest on the first house. The cottage was vacated by early January and #20 by early February allowing work to progress at full pace.
Our initial thoughts on the properties was to make selective improvements to them and to keep as much of the interior intact as possible - as you will see in future posts this turned out to be over optimistic on our part and we eventually realized that we would have to do a full renovation of the projects and take the houses 'back to the studs'. Hindsight and reflection two months later leads us to learning number two.
Learnings
1. When you buy a multifamily rental look really carefully at the legality of the rental versus the town planning and zoning regulations. You can probably assume there is something non-conforming with a purchase, and if you want to buy it assuming you can keep that non conformity just be aware of the risk you are taking. If you are doing anything more than cosmetic improvements to a house you can be sure the town authorities will be all over you!
2. If you buy an old house and think you can save something inside, you're probably wrong! Think hard about this early on in the process because if you don't you will make incremental decisions that can lead you down the wrong path. If you do go for the incremental approach be prepared to changes your ideas and plans as you uncover more information!
The purchase over October / November went pretty smoothly - the due diligence (surveys and inspections) suggested the houses were by and large in decent structural shape given their age, and that the apartments were legal (not a given in these parts as many multifamily properties are often illegal in terms of either their location in the wrong residential zone, or because they have jammed too many apartments into what is legally allowed).
The houses are in a great location - a quiet residential area in a good popular town where there are a limited number of quality rental properties and a restricted amount of space for expanding. People want to move here for the schools or to get out of New York at a certain point in their lives; or because locally there is a thriving job market in a 25 mile radius.
So we took the plunge in November and went ahead and bought the properties with the goal of upgrading them to a modern standard. The one catch at the start was that they came with incumbent tenants (apart from one very dilapidated apartment at #14). Luck was on our side however - the only tenant in #14 left in early December so work could start in earnest on the first house. The cottage was vacated by early January and #20 by early February allowing work to progress at full pace.
Our initial thoughts on the properties was to make selective improvements to them and to keep as much of the interior intact as possible - as you will see in future posts this turned out to be over optimistic on our part and we eventually realized that we would have to do a full renovation of the projects and take the houses 'back to the studs'. Hindsight and reflection two months later leads us to learning number two.
Learnings
1. When you buy a multifamily rental look really carefully at the legality of the rental versus the town planning and zoning regulations. You can probably assume there is something non-conforming with a purchase, and if you want to buy it assuming you can keep that non conformity just be aware of the risk you are taking. If you are doing anything more than cosmetic improvements to a house you can be sure the town authorities will be all over you!
2. If you buy an old house and think you can save something inside, you're probably wrong! Think hard about this early on in the process because if you don't you will make incremental decisions that can lead you down the wrong path. If you do go for the incremental approach be prepared to changes your ideas and plans as you uncover more information!
No comments:
Post a Comment