Rehab or rebuild: Is an old house worth saving? (© Homeport)

Homeport, a housing nonprofit in Columbus, Ohio, rehabilitates historic homes when possible, but not all houses can be saved. This home’s structure was severely damaged by a tree growing into it. © Homeport

Across America, nonprofit organizations are giving new life to old homes through housing rehabilitation programs. These efforts are preserving and restoring the character of historic homes and revitalizing neighborhoods. (Bing: Disadvantages of buying an older home)

“You really are saving a piece of culture and a piece of the fabric of that community,” says Nancy Welsh, who founded Builders of Hope in Raleigh, N.C., in 2006. “It has an impact on the people living there.”

But not every home can be saved, so how does an organization decide whether to invest time and money on any particular house or street? Cost is necessarily a key consideration for all of these organizations, many of which receive federal funding and therefore have requirements for return on investment.

That’s the case in Pocatello, Idaho, where Mark Dahlquist runs Pocatello Neighborhood Housing Services. In 2012, his organization received funds from the Community Development Financial Institutions Fund.

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“The CDFI Fund likes to see a sustainability revenue of above 40%, meaning that at least 40% of the revenue of the organization comes from within,” Dahlquist says. “They don’t like to invest in an organization that’s totally grant-dependent. So we have to work like a private business and make some money in addition to our grant revenue.”

The Pocatello organization makes that money by giving loans to homebuyers that those buyers repay with a bit of interest, and by selling the homes it has rehabilitated or built from scratch. To be profitable, it can’t invest in fixing up homes that don’t make financial sense.

“If we run across something with historic value but it would cost too much, we would walk away from it,” he says. “The real historic ones that need to be saved are like that. But our organization, if we are going to sustain ourselves, can’t do that. We have to make that economic decision to walk away.”

Slide show: 
10 rehabbed homes: Stunning before-and-afters

In Syracuse, N.Y., where Home HeadQuarters operates, vacant housing is a big problem. Rehabilitating those properties can be cost-prohibitive, so the organization is selective about which homes to fix up.

“You can’t do vacant-property rehab without a deep subsidy,” says Kerry Quaglia, executive director of Home HeadQuarters. “You could buy a home from the city of Syracuse for a dollar, but it is very dilapidated and you might have to put $100,000 into it to fix it up to make it safe. And it might be in a neighborhood where you can only sell it for $50,000 or $55,000.”

Many older homes require remediation for lead and asbestos just to make them habitable. “Then you can start addressing major systems of the house, like roofing, plumbing and electrical,” Quaglia says. “It drives up the cost.”

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Judgment call
His organization has found that it is often more economical to demolish these homes and start fresh. But it does occasionally invest in properties that don’t make purely financial sense.

“You might have a neighborhood that is otherwise pretty good, but there is one vacant house that becomes a nuisance,” Quaglia says. “We’ll get the resources to turn the property around and get it occupied.”

For some organizations, the save-or-demolish question is more of a “negotiation,” as Abigail Mack, who is director of homeownership of Homeport, describes it.

“It’s based on everything from the historic value of the home to the aesthetic character of the home, the quality, the condition it’s in,” she said. “Some of it is cost. If the cost would be excessive to renovate a unit, it’s a better use of public funds to demolish and rebuild.”

Choosing character over cost
What’s “excessive” for one organization might not be for another.

“If the character of the home is special in some way – a nice old style, really great features, a big front porch – that would be really hard to replicate on a new house, then that’s a consideration,” says Patrick Morrissy, executive director of Hands Inc. in Orange, N.J. “We might spend a little more money but would be saving a great old home.”