One of the things we love most about Portsmouth, Virginia, is the collection of historic homes that can be found in the area. It’s a modern and growing city, but it’s also full of history and culture. Olde Towne Portsmouth is perhaps one of the most charming historic seaports in the entire country. The most historic neighborhoods include antique shops, great restaurants, and leafy, walkable green spaces.
Portsmouth has the largest collection of period homes between Charleston, South Carolina and Alexandria, Virginia. This historic naval seaport might inspire you to invest in a historic home here. That’s a great idea, but you’ll have to be prepared for some unique challenges.
Let’s talk about what it’s like to invest in a historic piece of Portsmouth real estate.
Know the Neighborhoods: Where are the Historic Districts?
Before you can invest in a historic home, you have to know the historic neighborhoods. Where will you find this other-worldly home, full of history and secrets?
Generally, when we talk about the historic districts of Portsmouth, we’re talking about these neighborhoods:
The Truxtun historic district
Cradock historic district
Port Norfolk historic district
Olde Towne
Park View historic district
New development, rehabilitation, or redevelopment within a historic district requires approval of a Certificate of Appropriateness, COA, (in addition to any other required permits). When you buy a historic home here, you’re likely going to need to make some renovations and modifications. It won’t be as simple as finding a contractor and getting to work. You’ll need approval, and you’ll be expected to share any plans before you take action. The city maintains and shares the appropriate historic district design guidelines, and you’ll be expected to follow them.
These guidelines assist property owners, as well as the Historic Preservation Commission (HPC), in deciding what appropriate changes for structures in the historic districts are. The guidelines are also used to approve and initiate appropriate new construction.
Before you buy, make sure you’re aware of the approval process and comfortable with what will be required of you when it’s time to make any renovations, conduct any new construction, or alter the existing condition and appearance of your historic home.
Financing a Historic Home Investment in Portsmouth
Financing a real estate investment that happens to be a historic home is often different than financing any other real estate investment. When you’re buying a historic house in particular, there are some extra details and differing terms you’ll want to be aware of before you begin applying for loans. Preparation will help you avoid disappointment and surprises. Unless you’re planning to pay in cash, here’s how you’ll have to prepare for financing your historic house.
Gather extra documentation
The bank or lending institution you’re using will ask for information about the house you plan to buy. Any mortgage application will require details such as the house’s sales price and the house’s appraised fair market value. A qualified house inspection will be necessary. When you’re applying for funds to pay for a designated historic house, you may also be asked to provide information around deed restrictions, easements, or historic designation regulations. Do you have this? Do you know how to procure it?
Interest rates and lending options
Mortgages can be funny on their own, without adding the extra detail of history and protected architecture. Some historic homes are in neighborhoods that are unlikely to see a lot of financing from lenders. This could lead to a higher interest rate. If lenders are not conducting much business in Olde Towne Portsmouth, for example, the cost to borrow will be higher because they’re covering their own additional risk. Don’t be surprised if a lender asks you to obtain additional loan guarantees or increase your equity in the property (generally with a higher down payment) before they’re willing to approve the mortgage.
Is the property insurable?
We’ve never met a lender who shrugs off the insurance component. You’ll need to insure your historic home, and that’s going to be a bit more complicated than obtaining insurance for other real estate investments. For starters, it will be more expensive. Historic houses often require materials or methods that are either no longer in use or only done by a small number of professionals. Faithfully rebuilding such a house in the event of damage or destruction will almost always cost more than repairing a newer house. National Trust Insurance Services has some information about insuring historic properties. They’re a good resource if you’re struggling to find homeowner’s or landlord insurance for the property you want to buy.
The good news is this - you may be eligible for extra tax breaks when you buy and care for a historic home. Talk to your tax attorney so you don’t leave any money on the table once you’ve closed the deal. You’ll also want to make sure you’re aware of whether you qualify for the historic rehabilitation tax exemption that’s provided by the City of Portsmouth. Your home has enjoyed a specific increased assessed value after you make any renovations.
How to Make those Renovations to a Historic Portsmouth Home
You know that your historical investment property will come with a set of regulatory guidelines aimed at preserving the historical character of the home. Whether you’re planning to rent out the property or do something else with it, this investment will require you to consult with local city agencies before you make any changes to it.
You’ll want to partner with an expert in restoring historic homes, whether you’re updating the plumbing, renovating the kitchen, or trying to wire the home for wireless internet.
Here are some hot tips for how to do this correctly and respectfully.
Preserve as much of the architecture as possible
This means maintaining the original architectural elements when you can, especially if they showcase the property's era. When making repairs and upgrades, contract with experts who have access to restorative methods that retain the building's character while reinforcing its structure. Make sure it still fits the neighborhood. You want it to continue looking like a historic home, otherwise why would you have invested in this property?
Be mindful of the original time period when choosing décor and design
Some of the historic homes in Portsmouth have been around for almost three centuries. You can highlight features like exposed brick or original hardwood floors. If you’re renting out the historic property, this will not only preserve the history of your property, but also appeal to tenants who are looking for special décor and unique finishes and features. Consider using antique or vintage fixtures and elements that complement the historical theme. When you’re replacing drawer pulls and cabinet knobs, for example, don’t go straight to the shiny, modern nickel. Choose something that looks older but still functions in a way that’s easy and modern.
If you’re investing in a property that’s historic or special to the city, you may want to partner with local historians to get a deeper appreciation of what you’ve purchased.
Prioritize routine inspections and preventative maintenance
Implement a schedule of regular inspections by professionals with experience in historic preservation. You will need to consistently check up on your historic property to make sure it’s in good condition. These older homes are more prone to things like mold. When you’re ready, ask for an inspection from someone familiar with historic construction methods. Inspections may reveal signs of wear, deterioration, or small infestations that can quickly grow and cause significant damage. Frequent inspections can eliminate the threat and potential expense of deferred and unreported maintenance.
Routine maintenance tasks such as repainting, re-caulking, and resealing are essential for preserving the condition of an older building. Make sure you are regularly cleaning out gutters and chimneys. Protect your drainage system against moisture, which any expert will tell you is a common enemy of historical structures. These are preventative maintenance measures you’d take with any rental home, but they become more urgent when we’re talking about the preservation of historic buildings.
Historical Restoration and Portsmouth Property Management
Property managers can be a great resource when it comes to buying, preserving, and renting out a historic home. For example, when restoration is needed due to age-related issues, your property manager can set up a consultation with a preservation specialist. We work with professionals who can guide you on the appropriate techniques and materials to restore the home as closely as possible to its original state.
Don’t forget your responsibility to the community. Your property isn’t just a rental home, it’s also a part of Portsmouth’s history. Many owners find themselves asked to open their doors to historical societies, local historians, and educational groups. Be willing to do this whenever possible.
We would love to discuss your plans for buying a historic property in Portsmouth. Please don’t hesitate to contact us at Doud Realty Services, Inc. We provide expert property management in Norfolk, Portsmouth, Hampton Roads, as well as surrounding areas such as Virginia Beach, Suffolk, Chesapeake, and Newport News.