Can old be gold? Historic homes as investments

Historic home ownership isn't for everyone. If you've only lived in new homes with low-maintenance siding, 50-year roof warranties and modern security and efficiency, life in a vintage charmer will come with some surprises -- not all of them welcome.

Think twice

"Historic" is a classier term, but it still means old; and living in and maintaining an old home can be an adventure. Old plumbing, heating and electrical systems have had plenty of time to deteriorate. Yours will fail at some (monumentally inconvenient) time. Count on it.

Old homes derive much of their beauty from natural materials, which rot, grow mold, get eaten by termites and fade. There is no such thing as a "low-maintenance" historic home. In addition, old homes may contain hazardous materials, like asbestos insulation or lead paint. This makes DIY repair a risky proposition.

If your home is in a historic district, there may be severe limits to what sorts of changes you are allowed to make -- upgrades to your windows, for example, are often prohibited, which means your home might remain drafty and expensive to heat. Home security could also be a challenge.

Finally, historic homes were built when families were larger and houses were smaller. They are likely to have smaller bedrooms and kitchens than those you're used to. If you can't imagine life without a luxurious master suite, three-car garage or great room, a historic home is probably not for you -- it will almost certainly cost you more to add those things to an antique residence (if you're even allowed to do so) than it would to buy or renovate a newer building.

Think nice

Of course, historic homes have advantages, too. Older homes usually come with better quality construction. This is not just nostalgic fantasy -- they're better-built because in the past, higher grades of lumber were easier to come by, and labor was relatively cheap. Builders could afford to spend more time on craftsmanship that can't easily be replicated in today's houses.

Historic districts or neighborhoods are likely to boast lovely old trees and other mature landscaping. The aesthetics of older neighborhoods inspire many home buyers to seek them out.

Historic homes may be eligible for substantial breaks on property taxes, or even credits for preservation or renovation projects. Historic homes in designated historic districts are subject to rules in order to maintain the neighborhood's historical character and significance -- which means you won't have to look at an acid-green eyesore because your next door neighbor got a good deal on some hideous paint.

Homes in designated historic districts appreciate more -- in some cases, much more -- than similar homes not located in such districts, according to independent studies of local historic districts in New Jersey, Texas, Indiana, Georgia, Colorado, Maryland, North and South Carolina, Kentucky and Virginia.

On average, according to the studies, values of historic properties increased by 26 percent more than for homes without the "historic" designation. In addition, historic neighborhoods were found to be more stable, with both homeowners and renters choosing to stay longer than their counterparts in non-historical areas. The bottom line is that if your heart is set on a historic home, your head should not have a problem with it.