Older neighborhoods with winding streets lined with mature oak trees can be imagined in anyone’s mind at any time. Especially if you’re a real estate investor. Sidewalks, large green lawns and Tudor-style brick homes are an indication that the subdivision has been around for decades. These older homes are often referred to as having “good bones” due to the quality of construction.

And real estate investors today know that when they discover a lot or potential tear-down in one of these neighborhoods it’s almost always a gold mine. Yet before embarking too much further you first need to revisit the building codes then as well as now.

For example, you see a property that unfortunately has been neglected over the years, maybe even vacant. The neighbors want someone to buy it and tear it down to get rid of the offending real estate and that someone might be you. But building codes today are different compared to 30, 40 and 50 years ago.

If you’re considering a major rehabilitation, your first move is to contact your home inspector for a thorough evaluation. There may be some code violations you can ignore while others must be replaced. In older homes, you may discover that the electrical lines are aluminum. So what? So not only are they out of code they’re a fire hazard and insurance companies may refuse to insure the property. Was the property built before 1978? In this neighborhood it probably was and it may have lead paint. You’ll need to verify that the paint in the home is not lead-based and if it is the paint must be remediated.  Look at the electrical outlets along the wall. Are they two-pronged? If so, they’re not internally grounded and you should upgrade to the three-pronged outlet. If you’re building new, they’ll be required.

Whether you’re building new from the ground up or embarking on a major rehabilitation project, don’t forget the new code requirements and for a rehab, find out upfront what needs to be replaced and count those costs in your estimates.