Vintage is a gentler way of saying that something is older, yet it also implies enduring quality.
At GSH Group, an investment company focused on acquiring and managing multifamily residential apartment communities across the country, we've found that vintage tend to hold tremendous potential in terms of value and quality. We define vintage properties as those built in the 1960s, '70s, and '80s.
Some investors may shy away from older properties. Maybe they're wary of deferred maintenance, roofs in need of replacing, or the potential of significant expenses hiding in the pipes, electrical, or HVAC systems. But if you know what to look for and how to budget for the unexpected, vintage properties can be among the most lucrative opportunities on the market. Here are several reasons why:
1) They're located in prime areas. Older properties are typically found in mature neighborhoods with desirable restaurants, shopping, and attractions. These locations are mainstays in the area, and communities have continued to grow around them. Older, established properties also tend to be located in areas where people want to live and near where they work. From an investment standpoint, owners are less likely to face competition from newly constructed properties in the vicinity.
2) They sit on larger lots. Older communities often sit on a much larger footprint than newly built projects. It's not unlikley to find an older, 300-unit apartment complex situated on 30 to 40 acres, where today the same number of units might be concentrated on 20 acres or less.
This benefits property owners in two ways. The first is more space to add playgrounds, dog walks, clubhouses, walking paths, and other shared amenities that help create a community feel. Second, the units themselves are often larger. A two-bedroom unit in a newly constructed community might be 800 to 850 square feet, while a comparable unit in an older complex is typically 900 to 1,100 square feet.
3) You can keep rents affordable. When we're evaluating a multifamily property for potential purchase, we want a community that will be a good fit for a majority of renters in that market. For many people, rents in the $2,000 to $3,000 a month range are outside what's comfortably affordable. And yet, due to the cost of purchasing land, building, and the inclusion of upscale amenities, many newer projects necessitate rents in this range to make the numbers work.
By enhancing or adding similar amenities as newer developments offer, without the cost of new construction, and offering more spacious units and a larger overall footprint in a prime location, it's feasible to raise rents by several hundred dollars without pricing residents out of the market.
4) There's room for improvement. Older, well-maintained properties in need of upgrades are a boon for the savvy investor. Upgrading and unifying common areas is usually an excellent place to start. Strategically renovating the gym, clubhouse, and pool also helps the community feel like a resort. People want to be proud of where they live, and these types of upgrades go a long way toward enhancing that feeling. For unit interiors, replacing older cabinets, countertops, and appliances is typically all that's required, as is painting over dated color schemes with modern grays and whites.