However, an older property in need of a repipe doesn’t have to be an automatic disqualifier during the acquisition process. Recently, savvy investors have been specifically seeking out these types of properties, knowing they can scoop them up at great prices and have the repairs completed at a reasonable cost. With turnkey contractors who are able to quickly and cost effectively complete a repipe without having to move out residents, buying a property in need of pipe replacement can be a great financial investment if you plan ahead. By building the cost of a repipe into your transaction, you can very quickly realize some significant gains.
Taken at face value, property owners are hesitant to invest in pipe replacement because new pipes (installed behind patched walls) have no curb appeal and an ambiguous correlation to increased rents. However, what is often missed in the financial analysis of the potential acquisition is that a repipe can significantly improve your bottom line. Reduced maintenance/operating costs, decreased damages, fewer insurance claims and increased resident retention all contribute positively to your operating budget, and can often quickly offset the costs of the repipe. Those benefits, paired with the reduced purchase price of a leaking property, can all add up to a significant financial win.
Thinking of buying a property that needs a repipe, but still unsure? SageWater frequently provides bids on repiping a property as part of an acquisition transaction, allowing you to go into the deal “eyes wide open” as to what the real costs of a pipe replacement will be after closing. This provides for stronger upfront negotiations to ensure you are making a sound financial investment and hopefully avoiding any surprises after closing the deal.