Age Is Just A Number, Right?

Age Is Just A Number, Right?

Michael Coffee Michael Coffee

Michael Coffee

Chief Investment Officer?? Helping Investors fund their Commercial Real Estate projects

发布日期: 2022年12月15日
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The older buildings that most cities have scattered about their metro areas are some of the most unique and beautiful buildings around.?Especially those with a brick facade.?There are entire subsets of renters that seek out these types of properties and while some of them lack technological advances, they remain rented and usually at a premium.?If you happen to be seeking these out as an investment, there are some issues that should be vetted early in the buying process:

1)?????What building systems have been upgraded (wiring, plumbing, electrical)?

2)?????Is there enough electric service going to each unit??

3)?????Are there any abandoned oil tanks or boilers on the property?

4)?????Does the building have elevator service??If so, what is the cost to maintain that elevator?

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5)?????Have there been any seismic upgrades??Are any needed??

These are important questions not only for your lending source, but many insurance carriers struggle with older buildings that haven’t been upgraded.?Lenders will finance these types of properties, but most have guidelines about the physical age and the remaining economic life of the building.?If you are aware of what has been improved on the building and have a plan on how you will improve the building going forward, they can bend on the guidelines.?

Once you have a lending source lined up, obtain a copy of their insurance requirements, and get them to your potential insurance agent quickly.?If there is a challenge around obtaining coverage, you will need time to shop around to find a carrier that can meet the lender’s requirements.?Since the cost of that insurance will impact your NOI, it is best to know early what that annual premium may be.?Keep in mind that most carriers are now charging more for coverage on these older buildings.?TIP: Have your property inspector make specific notes about the system upgrades during his inspection, you can share this information with your insurance provider to hopefully lower the premium.

Michael Coffee | Capital Advisor | [email protected] | 503.866.8817

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