Investing in new building construction is the next big niche in the real estate industry. Instead of purchasing an old house to flip, many more investors are buying new buildings. Instead of purchasing the property from another investor or the homeowner, you’re buying it directly from the building’s creator. Investing in these “real estate new builds” is proving to be a strategy that yields profitable returns.
To help you make a final decision, it’s best to consider the pros and cons of buying new construction properties.
Benefits of Buying A New Building
- A wider market. A great new building property is much easier to find than homes that are being foreclosed or wholesale real estate. You can skip making the lowest initial investment and instead focus on a building in a great location with better amenities. New properties will come with better interest rates as well.
- Better location. The problem with most flip homes is being located in an undesirable neighborhood. This doesn’t mean you won’t sell it eventually, but it’s more of a gamble. These homes can also attract irresponsible tenants. New buildings are typically in nicer areas.
- Quality warranties. New home warranties can last up to ten years, so the responsibility of fixing a plumbing problem or a leaky roof will never fall on your shoulders.
Downsides of Buying A New Building
- More expensive. Obviously, you’re not going to get the best deal on a brand new building vs. previously owned. Paying for a new building’s retail market value may not be in your budget as a new investor.
- Many uncertainties. Unlike older homes, you’ll have difficulty making a cash flow analysis when you don’t even know what your property taxes will be.
- Selective buyers. Some people are looking to buy their first home in a fairly populated area with a community setting. Since new buildings are just being established, they won’t have these aspects.
If you’re still unsure whether to rehab or buy new, contact us for specialized advice!