When purchasing single-family rental properties, selecting a recently built home has both advantages and disadvantages. While newer properties offer benefits like more customization, higher energy efficiency, and less maintenance in the first few years, all these things may cost you more upfront. This is often true because upgrades aren’t cheap and because there is usually very little room to negotiate on price. No matter which 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
In many instances, purchasing a newly constructed home for rental use can be a solid investment. With new construction, investors have the advantage of buying a home that’s ready to be rented immediately, with attractive upgrades already included in the price. This can lead to fewer costs associated with getting the property ready for your first tenant.
If the new home is move-in ready, rental income can begin right away. Moreover, the upgrades included in the price allow for customization, making it easier to target specific renter demographics. For instance, a home outfitted with smart technology is more likely to appeal to a Millennial renter.
Benefits of Modern, Energy-Efficient Properties
Tenant appeal is crucial for the success of any rental property, and new homes offer renters something older properties cannot: the chance to be the first and only tenant to live in the house. Additionally, newer homes generally provide significant utility savings, thanks to better energy efficiency. Renters looking for long-term residences may especially value the opportunity to live in a modern, low-maintenance, energy-efficient home.
While these are all good reasons to invest in a newly built home, there are some disadvantages to be aware of. Not all builders deliver the same quality of work, and some may use cheap materials to cut costs. If that’s the case, it could lead to ongoing maintenance issues or higher repair costs down the road.
Customization options may also be limited. Although some customization is possible, it’s often restricted to a narrow range of choices, like finishes and fixtures. Adding more options could increase the overall price.
Is New Construction Right for Your Investment?
If you’re an investor who likes finding a good deal, buying a new home might not be your best option. The price of new construction is typically set by the builder, which leaves little room for negotiation.
Builders may be unwilling to lower prices as doing so could affect the data on comparable properties in the neighborhood, making it harder for them to sell homes in the future. That said, it’s always a good idea to ask about available discounts or financial incentives.
It’s important to weigh all the pros and cons before deciding to buy a new home for rental purposes. Understanding whether a new property is a smart investment for your market and demographics is key to making the right choice.
For detailed market insights, consider working with Real Property Management Abound, which provides property owners in Owasso with valuable data and assessments to help them make informed investment decisions. For more information, contact us online or at 918-984-4433.
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