Historic property can be a smart investment over time. However, historic properties have a distinct set of guidelines, and should be approached differently to avoid any confusion. Here are four things to know before you purchase and restore a historic building.
#1. Historic property usually has additional rules
If you’re planning on buying a house or building in a historic district, understand that you probably won’t have the freedom to make as many changes as you would with other types of property. Most historic property is protected by local, state, or federal legislation in order to preserve its historic integrity. The government is quite strict about what you can and can’t do to a historic building, so make sure to consult a government official or someone well-versed in property law before making any impromptu purchases.
Managing historic properties can become stressful at times. You’ll be expected to fill out paperwork and secure a Permit of Minor Work or a Certificate of Appropriateness (COA) before making any changes to the building. More often than not, these changes will require an initial inspection, and that you follow a strict set of guidelines. Furthermore, if your property is in a historical area that depends on tourism, like neighborhoods in Savannah and New Orleans, you can expect to adhere to even stricter procedures.
#2. Think about what you plan to do with the property
What exactly do you plan to get out of the historic property you’re repairing? Restoring the building in a manner that returns it to its original condition is the easiest way to rehab a historic house or building. If you’re planning on converting it to modern use, you’ll be expected to navigate around a lot more red tape.
The US General Services Administration has helpful information regarding the dos and don'ts of restoring historic property that can help you get an idea on how to approach your restoration project. Just remember, while it’s not impossible to turn a historic building into a modern working or living space, it’s imperative to do your due diligence first.
#3. Historic property needs extra care
Older properties are prone to come with age-related problem that can cost a lot of money to address. You don’t want to flip an old house or building just to find out that it needs costly foundation repair, or is filled with asbestos and lead paint that needs to be removed. This is why you should have old properties evaluated by a licensed inspector so you don’t get stuck with a refurbishing bill that’s twice your budget.
#4. Historic properties and taxes
The good news about owning historic property is that you may qualify for a 10% or 20% tax credit by virtue of owning the property. But, this shouldn’t be your primary motive for buying historic property. Your historic district could have higher tax rates than other parts of the city, thus offsetting your tax credits.
Overall, buying historic property can be a great investment as long as you’re certain about all the rules and regulations beforehand.