Historical properties are buildings and structures that have been around for a while and have significant historical, architectural, or cultural value. These types of places always have a rich history with unique characteristics.
The General Administrative Services office of the US government runs an initiative called ‘historic building stewardship‘. As a part of this program, the government has preserved over 300 historical properties for functional and ceremonial purposes. So if you want to be profitable while still preserving heritage, these kinds of property investments are where you need to look.
Why invest in historical properties?
Preserving Heritage
One big reason investors like historical properties is the chance to keep them around. A house built in 1920 often doesn’t feel very different from one built in 2020. But when you get into the 1800s, things start feeling much more unique. Historical properties give us a glimpse of the past by showcasing craftsmanship and architecture that no longer exists today. When buyers acquire these sorts of spaces, they’re not only helping conserve history but also restore it after years of decay.
Tourism Potential
Because lots of people love exploring local culture and history, buying historical properties is great for tourism. As an investor, you can transform your building into all sorts of cool things like museums or venues to rent for parties and events.
Just imagine how many awesome experiences tourists would get out of staying at an old hotel or eating at an old restaurant! Once word gets out about these spots being back in commission, your income will surge thanks to the constant stream of visitors.
For example, Alhambra is a palace and fortress with Islamic architecture located in Spain. Investing in a property like the Alhambra might not make sense since it’s publicly owned and you can’t exactly buy shares of something like this.
But, what if we considered the surrounding area or other historic properties around that would work well with such a heritage site? Properties close to Alhambra are sticky. They’re in high demand and it’s for a good reason, too. The historical significance of the area allures buyers who only want one thing — experience.
Property managers could build boutique hotels or vacation rentals around the area which would complement the historic ambiance this place naturally gives off. This way, tourists will have an even better experience here. It will allow investors and businesses to tap into the tourism market by providing value-added services such as guided tours or cultural activities.
Unique Selling Points
People looking for houses usually go for new or modern ones because they are not sure if they can adjust in older homes. But there’s something about these kinds of buildings that really makes them stand out against everything else on the market.
Sure, some people may find certain things tacky or just plain outdated. But it’s incredible how well some owners cherish and preserve historically accurate art. With so few authentic designs left today (that won’t cost you a bajillion dollars), people will probably pay much more for yours than a new condo down the road.
Tax Benefits
Historical property investments come with plenty of tax benefits too. Governments from all over the world know we need to keep these old buildings alive. So they offer investors all sorts of incentives to save them while keeping their own finances rolling in. These tax benefits can make building ownership costs go way down and that means your profit goes way up!
Cultural Integrity
Maintaining cultural integrity is a top priority. Through sustainable tourism, property management aims to promote the region without compromising its heritage.
The Return on Investment of Preservation Work
Pumping money into restoring old buildings and cities takes faith. It comes with a lot of financial risks that owners willingly take on to show their belief in the returns on culture investments and social capital values. Here are a few things you can do to ensure good financial returns on your renovation efforts.
1. Apply modern comforts while preserving history, but don’t overdo it, like replacing original wood floors just for energy-efficient lighting’s sake.
2. Does change equal more value? Look at each decision you make carefully — what will you get back? How does it benefit your business and tenant?
Let’s take an example from the United States—the Pizitz Building in Birmingham, Alabama. This property was originally built in 1923 as the flagship location for the Pizitz department store. After the store closed in the 1980s, the building sat largely vacant and fell into disrepair.
In 2015, Bayer Properties began an extensive renovation project to restore the Pizitz Building, transforming it into a mixed-use residential development. Here’s a step-by-step overview of the planning and execution that went into this restoration:
- Historical assessment- Determine what you want to save by looking at old pictures or layouts for example
- Planning and permits- Secure everything possible through historically certified architects
- Modernize while keeping character- Exterior façade, grand staircase, intricate terrazzo floors were preserved because developers found charm here. In November 2015 Bayer Properties announced renovation “to restore the Pizitz Building…and transform it into a mixed-use development.” The company succeeded and today there are apartments, office spaces, retail shops, and even a food hall within.
- Working with Local Authorities and Organizations- Historical preservation has guidelines that need to be followed. In order to ensure the renovation of the Pizitz Building did so, “Bayer Properties collaborated with local historical societies and government entities.” Leveraging any possible tax incentives is key too — federal and state historic preservation tax credits are designed to reward people who choose to preserve such buildings.
- Sustainable Development- Buildings today must meet a certain bar for sustainability. So when renovating, it’s best to include modern practices like energy-efficient HVAC systems and lighting. By doing this, developers help reduce the building’s carbon footprint all while appealing more to those renters who are environmentally conscious.
- Community Engagement- Making sure the city knows what’s going on is crucial — it ensures The Pizitz Building will be well integrated within downtown Birmingham’s urban fabric. One hot spot that residents are familiar with now is the food hall which doubled as a gathering place for locals.
Challenges in Renovation
Renovations are tricky on these kinds of buildings, because regulatory compliance is a complex process with stringent regulations. To do things right, diligent research needs to be done or experts in heritage conservation need to be enlisted. Finding authentic materials can also be difficult, and costly.
These resources can be hard to find, but they’re necessary if you want your property’s historical value to stay intact. And while we all love old things, modern amenities had to be put in place for any tenant to even consider the building as their own. Investors have to work hard when finding balance between the two so that maximum profitability is achieved.
Marketing Historical Properties
It’s crucial that all unique features and rich stories surrounding a historic property are showcased when advertising it. Speaking about original architectural details, previous owners or significant events that took place on the property, and its historical significance in service to the community always grabs some attention.
Heritage Organizations And Local Community
By partnering with heritage organizations and engaging the local community, investors can better promote and preserve historical properties. These partnerships will grant companies increased visibility, access to resources and expertise as well as support in navigating regulatory requirements. Not to mention the sense of community it creates and the positive reputation that comes with fostering relationships with stakeholders who prioritize conserving landmarks.
Virtual tours combined with professional photography are great tools for giving potential buyers or tenants an understanding of what a property has to offer without being there in person. Although they aren’t able to physically walk through a space digital alternatives like this allow them to virtually explore it from their own home which gives better insight into layout and potential.
Investing in historical buildings should is not just an opportunity gain financial benefits from a long term investment, but also a way of forming connections with our past and leaving behind legacy for those who come after us.
