*This is the first in a three-part series on considerations when purchasing older buildings.
Purchasing a building that is 25-years-old or older requires a significant historical investigation and analysis to determine the risks associated with the building. These articles are intended to aid any investor attempting to answer the following questions:
- How do you identify the risks that come with the ownership of an older building?
- What factors can hurt the future net cash flow of an older building?
- How much more economic life is left in the building
- How many years are left that will produce reliable income from the ownership of the building?
- How do you determine the current value of an asset with a shorter economic life?
A building’s “useful life” depends on its previous ownership, intended use, and prior maintenance regime.