How we can Buy into Historic Preservation, Part I


Buying real estate is an effective historic preservation strategy(This is the first in a two-part series on how cultural resource management professionals can further historic preservation by purchasing properties with historical buildings or archaeological sites.)

From its conception, property ownership has always been integral to historic preservation in the United States. The most influential historic preservation groups in the United States—organizations like the Mount Vernon Ladies Association, the Society for the Preservation of New England Antiquities (now called Historic New England), and the National Trust for Historic Preservation—all got their start by purchasing real properties to prevent them from being destroyed. Some of these groups have become quasi-public intuitions as the communal nature of historic preservation dovetails nicely with concepts like amenity, the “commons,” and “the public good.”

Preservation regulations also include a number of economic incentives designed to reward local governments, organizations, businesses, and private individuals who own and manage historic properties. But, these incentives directly benefit the bank accounts of property owners. The economic benefits of historic preservation at the local level has been widely documented, but property owners are the ones that directly benefit from stable property values, tax rebates, and other incentives. While we all benefit from interesting historical districts, landmarks, and open spaces, you have to own the property in order to directly reap the economic rewards.

Buying property can be expensive. In fact, homeownership in the United States has been dropping over the last 10 years as property values skyrocket and wages remain stagnant. It is unlikely purchasing a home will be any easier in the near future.

Given this reality, the question many CRMers are asking is: How can lower middle class Americans like those doing cultural resource management afford to buy historic or potentially historical properties when many of us can’t even afford to buy a home at all?

The answer is: Through creativity and hard, intelligent work.

The Sticks and Carrots behind historic preservation

Owning historical properties has economic benefits that come from national, state, and local laws. Tax incentives and rebates may be enough to make fixing up an older home economically feasible. Some developers actually depend on these incentives.

In addition to economic ramifications, owning a historic property has other pros and cons. It may be difficult for a historic home to pencil out as a sound real estate investment until after it has been repaired/upgraded/remodeled. And, these improvements may be more expensive than gutting a non-historical home. Fixing up a historic building can be a labor of love.

Conversely, they just don’t build houses like they used to. Old growth lumber, materials that are now rare, and rock solid construction are characteristic of the way houses used to be built prior to the 1970s when developers started spamming out cheap houses for the millions of Americans that could easily finance buying a home in the suburbs. Today’s codes mean our homes are sound but we just don’t have abundant natural building materials like we used to.

Restoring a historic property is also more environmentally sound than buying new construction. The Planet Earth has had time to ameliorate the pollution caused by creating the materials used in the building’s construction. The forests harvested for lumber have had decades to grow back. And, you’ll be keeping tons of construction debris out of a landfill because you’ve decided to fix up an old building rather than tear it down and build a new one.

Finally, you might be purchasing an archaeological site. Homes built before the widespread adoption of municipal garbage collection services probably have artifact scatters at the back of the property. Privies, wells, and cesspits associated with nineteenth century buildings are known artifact repositories. If you buy a rural property, there’s a chance you could have obtained a prehistoric archaeological site. Who better to own an archaeological site than a CRMer?

While you won’t reap the same tax incentives, you can still benefit economically by simply buying an older home (one built before the 1960s). Early and mid-twentieth century homes are solidly built and used durable materials. Due to the post-World War II housing boom, these houses are also plentiful and you can find whole subdivisions of houses this old that are still in good shape. Best of all, there are thousands affordably priced mid-twentieth century houses, strip malls, and other buildings from this era in urban districts across the country that are ripe for rehabilitation.

Unlike houses in new subdivisions, buildings in these urban midtown districts don’t need another 30 years before they’re mature. The schools, roads, and other infrastructure in these districts have already been paid for by local municipalities so you won’t be saddling future generations with public debt the same way new exurbs and suburbs do.

As cities rehabilitate decaying downtowns, these midtown districts are conveniently located between the suburbs where people think they want to live and the vibrant downtowns where people want to work and play. New streetcars, park-and-rides, and commuter systems traverse midtowns, brining additional economic benefits and infrastructure investment.

You’re not the only one that buys archaeological sites and historic properties

Buying historical properties or archaeological sites is nothing new. As I mentioned before, there are other organizations that have been doing this for decades. Perhaps the biggest preservation organization in the United States is the National Trust for Historic Preservation. This public-private collaboration has spearheaded preservation legislation, restoration education programs, and advocated for tax credits. The National Trust boasts over 750,000 members and has been a major player in American preservation.

The Archaeological Conservancy is another preservation-oriented organization that finds creative ways to acquire archaeological sites and historic properties for conservation. Started in 1980, the Conservancy works with local organizations and property owners to purchase, inherit, or place easements on properties with sites so they can be protected. Their website boasts the Conservancy has acquired over 500 sites across the United States.

Finally, my favorite poster child for CRMers doing good preservation, Archaeology Southwest acquires archaeological sites to both research and protect them. This organization was a non-profit outgrowth of the CRM archaeology company Desert Archaeology, Inc. which has been doing good archaeology throughout the Southwest since 1982.

Focusing on acquiring, rehabilitating, and selling old houses isn’t just confined to preservationists. There are other organizations obsessed with old houses. The folks at Circa built a niche magazine dedicated to rehabilitating old houses for personal enjoyment and real estate development. This resource also has a wealth of information for people interested in fixing up old houses. In addition to developing for new construction, the team at HRS Communities also advocates for renovation and historic preservation. I’ve also heard of other developers like the late Bill Naito in Portland, Oregon who emphasized rehabilitating older properties. I’ve also had private conversations with a former elevator repairman has become a self-made millionaire buying and rehabilitating properties in Boise, Idaho, many of which are older, potentially historic, properties.

Basically, there are resources out there for Americans interested in buying older buildings to preserve them for future generations. Historic preservation has a huge economic impact on American communities. It is also the source of millions of dollars in real estate profits for a number of preservation-minded investors, businesses, and home owners. You could do what they do.

Where should you get started?

I think you get my point. But, I still haven’t addressed how you can get your preservation real estate portfolio started. Like every venture, getting started requires three things— money, knowledge, and action. Here are some suggestions on how you can get started acquiring properties for preservation’s sake:

Start building an investment fund— If you aren’t saving at least 10% of your income, you are doing yourself a disservice. I’ve talked about this before at length. Your first financial goal should be to build a nest egg of three to six months worth of expenses to shield you from any financial disasters. Once you’ve got that up and running, you can use your ability to save to start building an account you can use to buy property.

My wife and I built a down payment for our first house by living off of one income and saving all of the other. For about four years, we lived in Seattle on my salary as a CRM archaeology crew chief. This could only be done because we lived in a one-bedroom, 400-square-foot apartment with no cold water. We only had one car, a 1995 Toyota Camry, and took the bus to work. I also saved most of my per diem. Once we had a six-month nest egg, we invested the rest in a self-managed index fund.

We were able to save about $40,000 in that amount of time but IT STILL WASN’T ENOUGH TO BUY A HOUSE IN SEATTLE. Home prices rose faster than our investments and savings. We weren’t able to buy a home until we moved to Tucson where amazing houses cost about 30% of what they do in Seattle.

The moral of that story is: You can save your pennies all you want and still not be able to buy property in some places. For example, I don’t know how anyone buys a house in California. They all seem delusionally priced. But, there are lots of great, affordably priced mid-twentieth century homes for sale in Tucson. Going it alone may not work in places with crazy house prices, which is why you’re going to have to be creative to make it work in those communities.

Learn about the historic preservation benefits offered in your community— You should learn all you can about the economic incentives available in your neck of the woods while you build your investment fund. The combination of tax incentives plays out differently depending upon where you live because, as with all things associated with historic preservation, everything is local. Tax rebates for remodels and upgrades are different in every community. Certain districts have economic benefits for buying in certain districts. Zoning overlay districts are also a popular means of conveying tax incentives for buyers and developers in historic or economically challenged districts. There might even be incentives for you to hire a Minority/Women-Owned Business to help with the remodel on your historic home.

It’s likely you’ll have some time on your hands before you raise the capital to buy a historic property so spend that time wisely. Learning about the economic benefits that come with preservation is a good way to spend some of that time.

Learn about real estate in your community— Buying property is complicated. Most of us do not learn the ins-and-outs of property ownership in school. Also, buying property is different depending upon where you live. Fortunately, there are tens of thousands of real estate investors across the country that can help you learn what it’s like to buy property in your community.

In addition to learning how to leverage preservation economic incentives, you should hook up with a real estate development group in your community. Be honest about who you are, what you want to learn, and what you can contribute. An extensive knowledge of historic preservation regulations and incentives could be a useful addition to the right real estate investment group so don’t sell yourself short.

If you don’t have time to find an experienced investor, you should seek out books, magazines, podcasts and other resources to help shorten your learning curve. You should also start “driving for dollars”—driving, walking, or biking through neighborhoods in your town in search of investment opportunities. You need to know what kinds of properties are available in which districts and how much those properties cost in those locations. This will do much to familiarize you with the real estate market in your town.

Learn how to do house-related stuff— You can dramatically reduce the cost of repairing and rehabilitating your older building with sweat equity (i.e. doing things yourself). Unlike what you see on those property shows, most of us can’t just plop down $87,000 to get a house remodeled. You’re going to have to do a lot of the work yourself unless you want to keep paying retail for all your home improvements.

As a homeowner, I can tell you there is a wealth of information about home repairs on YouTube. I can’t tell you how many times I’ve streamed a short video on my phone to see how you fix an evaporative cooler, install a new outlet, install a bathroom counter top, or patch some drywall. These videos didn’t make me a professional contractor but they saved me thousands of dollars on stuff I otherwise would have paid somebody else to do.

(WARNING: While you can save money doing stuff yourself, you can also fu*k things up. Understand there is a learning curve with all home repair projects, especially if you’re just learning from YouTube videos. Be ready to get things done by a professional if you make a major mistake.

Also, some things are governed by local building codes that require you to get them done, or at least designed, by a professional. This may cost you money that you may not recoup in the future. For example, you’re probably going to need an architect to draw up plans for adding a room onto your house even if you plan on doing the work yourself. If you do it yourself without the architectural drawings, you will probably need to disclose this bootleg addition when you sell the property or for insurance purposes. It behooves you to do this sort of thing without going through the proper channels because you’ll probably end up having to pay to remedy any code violations. Don’t cripple future profits by doing work that could be in violation of local codes.)

Most home repairs are learned from experience. Helping your friends and family who already own a home is one way to get experience on myriad home repair projects that will serve you well when you get your own property. I’m sure your friends and relatives wouldn’t mind some help on their next repair job.

(Optional) Use your side hustle— I’m a huge fan of the side hustle, especially for archaeologists. Starting a side hustle is another way you can build that investment fund. In some instances, you could do a side hustle that actually helps your ability to rehabilitate an older home. For example, you could work on weekends for a contractor or landscaping company so you can get first-hand experience doing house stuff that you could later parlay into home repair projects. Or, you could start a lucrative side hustle that helps you earn money that you can use for investments doing something CRM-related: Taking on GIS projects, writing code for apps or websites, teaching online classes, giving talks about history or archaeology, landing grants so you can get paid to do research, writing sales copy… Any one of these hustles could bring you income that could be rolled into your investment fund.

You will need to take action

You’re not going to become a property owner without acting. Reading this blog post is a start; continuing to research this idea is even better. Sick of hearing how an archaeological site got destroyed to make way for another outlet mall or how a block of older homes in your community is slated for demolition to make way for the Condos of Gentrification? Start learning how you can buy these properties and save them yourself.

In the next post, I will provide a brief overview of how cultural resource management professionals can actually afford to buy archaeological sites and historic properties. Stay tuned.

While you’re waiting for the next post, feel free to write a comment below or send me an email.

 

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