A newly constructed home has both advantages and disadvantages when looking for a rental property for one family. In the first few years, newer properties may have advantages like higher energy efficiency, more customization, and less maintenance, but they may be more expensive up front. The fact that there is typically limited wiggle space in the pricing of improvements makes this a common reality. Any property you choose, it’s crucial to weigh all the pros and cons carefully to ensure you get a solid return on your investment.
Investing in New Construction Rental Properties Can Be a Smart Move
The purchase of new property for use as a rental can be a promising investment in many ways. When it comes to getting the best value for their money, new construction gives investors the chance to buy and immediately rent out a clean, attractive rental home with lots of nice upgrades. There won’t be many additional costs to get the property ready for your first tenant because the upgrades are included in the sale price.
Rental income could start right away if the new home is immediately ready for occupation. Investors can customize the rental home to appeal to a specific renter demographic by utilizing a number of upgrades included in the price of a new home. A Millennial renter, for instance, will be more interested in a new home that has been updated with smart technologies than one that has not.
Benefits of Modern, Energy-Efficient Properties
With older homes, renters do not have the opportunity to be the first and only tenant who has lived in the house. A successful rental property must appeal to potential renters. Newer properties are typically more energy efficient generally, so tenants who rent a new property also benefit from significant utility savings. Modern design, low maintenance requirements, and energy efficiency are sure to attract long-term renters.
There are strong reasons to buy a new home as your next rental property when everything is considered. That being said, keep the following cons in mind as well. Remember that not all builders are the same; some may use cheap materials or look for other ways to save money.
You might have to spend more money on repairs and maintenance if you can’t get the builder to do the job right. The small number of options that are offered is another disadvantage. Although there is a degree of customization available, it is typically a matter of choosing between a limited selection of wall colors, countertop types, etc., or risk driving the purchase price up.
Is New Construction Right for Your Investment?
If you’re an investor who likes a good bargain, a new home purchase might not be the best choice. There is often room for negotiation in the price of new construction because it is not always set by the market or a previous owner.
Because lowering the base prices on their homes affects the data on similar properties in the area and makes future buyers want to deal with them as well, buying from a builder might make them less open to negotiation. Because things can and will change, try to get any discounts or other financial incentives that are available.
Before purchasing a new home to use as a rental property, weigh all the advantages and disadvantages. But because there are so many factors to consider, it can be hard to tell if a new property is a good investment for your market and demographics.
You need detailed market information, like the kind offered to all Allen property owners working with Real Property Management One Source. We perform market assessments for all potential rental properties, ensuring owners who partner with us have the tools and information they need to make the best investment decisions. For more information, contact us online or at 214-721-0727.
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