Buying a historic home
By Pam Withers and Julie Burtinshaw • Bankrate.com

Pat Parker's house will turn 100 next year. For its birthday, he plans to throw a party and buy it a back porch.

The Victoria real estate agent, who specializes in character and heritage homes, lives in James Bay, the city's oldest neighbourhood, and makes no bones about lovers of old homes being sentimental types.

"Many owners of older homes look on their home as a living, breathing entity. We attribute life-like characteristics to it," he says.

That sentimentality can sometimes be turned into profit. Parker tells of a neighbouring water-view character home that listed at $600,000 last year. The buyer paid $640,000, poured $200,000 into restoration and sold it this year for $1.5 million.

With the number of old character homes shrinking (active listings are down 50 percent, according to one source) and demand for them growing, the market for buying, renovating and flipping them for profit is hot.

But fixing up a historic home is no guarantee of a financial windfall. Because of building restrictions on most historic homes and the amount of money you'll need to spend fixing them up, you should be cautious. Here's what you need to know:

Boomers are hot on historic homes
The first thing to realize about historic or character homes is, whether perfectly restored or in need of work, they don't come cheap. Typically, they sell for well above their asking prices. In Vancouver, for example, they fetch an average of $30,000 more than plain Jane homes.

On top of that, the cost of renovation and restoration is not insignificant. According to Ralph Belisle, owner of TQ Construction, a renovation firm that specializes in character homes in Burnaby, B.C., quality renovation on a historic home costs the same or slightly less than building new.

Two of his clients recently had their 1,600 square-foot, $450,000 bungalow renovated at a cost of $200,000. Today, the now 2,500-square-foot house is valued at $750,000.

Neither experienced flippers nor renovators recommend house restoration as a surefire way to grow your bank account. "It's something for a homeowner with nerves of steel and a good market study," says Belisle. "You really have to do your research."

But if you think you have what it takes, chances are good you won't have trouble finding a buyer. "Four years ago, it was popular to buy a suburban home and modernize it," says Belisle. "Starting in 2002, we started to see two things happening: a growing attachment to older neighbourhoods and more three-generation families buying up the older, larger houses."

That, combined with skyrocketing real estate prices, has contributed to demand for older homes more than doubling, says Belisle.

"Older homes are gaining popularity," confirms Diane Switzer, executive director of the Vancouver Heritage Foundation, a not-for-profit organization committed to the conservation of heritage buildings. "We get four or five phone calls per week from homeowners asking for ideas on everything from paint colours to how to replicate original windows."

And who, exactly, is looking for these homes?

"Boomers are prepared to look for character more than convenience," says Patrick Skillings, a Victoria real estate agent. "The workmanship that existed 100 years ago is almost impossible to replicate today, and the quality of the wood is finer. The labour-intensive woodwork would be cost-prohibitive today."

Getting a heritage designation
If you're serious about restoring your home, you may consider going to the trouble of getting it listed officially as a heritage home. It may save you some money and the added prestige may even get you a better price for it.

Obtaining a heritage designation involves sending plans, specifications, costs and the contractor's name to a heritage foundation committee before work commences; submitting to that organization's inspections before and after construction; and waiting for a board to rule on the project.

The advantages of having your home classified as historic property are many. They include:

• a potential refund to the tune of 10 to 25 percent of the project's exterior costs in grants accessed through local heritage foundations. You can search for foundations through the Heritage Canada Foundation;
• a guarantee that future owners can't reverse the work you've done restoring your labour of love because they'll likely never be issued a demolition permit;
• a heightened interest from the small cadre of hard-core heritage-home-lovers when it comes time to sell.

But take note: just because it's old doesn't mean a house will clinch heritage status. It must have significant architectural features representative of a style or era past, says Skillings.

The disadvantage of having an official heritage designation is it can scare off some potential buyers because of the many restrictions that are part and parcel of the designation.

For example, the exterior of an A-list heritage home can't be altered at all, says Belisle, while a B-list home will meet roadblocks at city hall involving anything from what colour you can paint the exterior to the size of a rebuilt deck. "Even old homes that aren't registered as A or B will meet restrictions," he cautions.

City hall may also forbid subdivision on heritage-designated homes located on large lots or acreages, adds Rod McFarlane, an architect and restoration specialist in Delta, B.C.

For love or money
If you're looking at buying an older home to enjoy over the long term, keep in mind that there may be some disadvantages. "There are some cons," admits Skillings. "Owning a heritage home is like owning a classic car. More care and attention is required."

But if you're someone who loves old homes, that probably isn't enough to stop you. More than 20 years ago, Maureen Arvanitidis and her husband spotted a rambling, run-down home in New Westminster, B.C. "As soon as we saw it, we wanted to fix it up," she says.

The once-handsome 1912 Tudor had been turned into a rooming house, but Arvanitidis envisioned its earlier history and what it could be again. What the couple lacked in experience, they made up for in enthusiasm.

"We did as much research as we could. We got pictures of the house from the library and the museum archives. We did a title search and went through old newspapers, eventually finding information about the original builders and owners," she explains.

After finishing the restoration, they had their home designated a heritage house, then sold it and moved onto several other heritage projects, proudly saving at least two from wreckers' balls. They didn't have trouble selling them and didn't lose money on them, but they did it primarily for love.

Pam Withers is a business journalist, business-book editor and author of several best-selling teen novels. Julie Burtinshaw is a researcher and novelist.