The Benefits of Investing in New Construction Properties
11 Jan 2022
5 min read
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While all investment strategies and different types of properties have their own competing lists of pros and cons, some can feel like easier approaches, particularly for investors who may have a fairly new portfolio. For those looking to invest in new construction, the possibilities of how and when to buy, hold, and rent out seem straightforward and endless.
Homebuilding hasn’t slowed down and as a result, opportunities for investors to jump on new constructions are ample.
One of the obvious benefits of investing in a new construction is, well, the newness of it all. No refurbishing, no cutting corners, no prioritizing what can be left as-is versus what needs to be done. Everything is new, and as such, there is great appeal for prospective tenants to scoop these up as they become available. As move-in ready properties, there is generally very little additional investment required to prepare for the first tenants, and while investors may be paying for a higher retail cost to secure the property, they are exchanging that for lower maintenance costs (which can become some of the unexpected costlier expenses when investing in older properties).
The adage of “location, location, location” also pops up frequently with new constructions since they are often found in new or upcoming markets, meaning lower crime rates, better schools, and higher-quality tenants. In short, a greater potential for a strong ROI. For new investors looking to expand their portfolios, new constructions located in growing markets increases the property’s appreciation rate and can build equity faster.
An added layer to the new construction route is looking at pre-construction opportunities, that is, homes that are in the process of being built. You may find you have more control over your buying process and timeline since buying an unfinished property means the builder should provide an accurate closing date upfront, making your planning process smoother. As a result, you’ll also avoid the headaches of bidding wars on existing homes for sale, especially when looking in a competitive buyer’s market.
New constructions present unique opportunities for investors to grow while also providing renters with brand new homes to live in. For those looking to dip their toes in real estate investment world, this might be one of the best strategies to consider. If you would like to partner with a lender that provides competitive loans for new constructions, contact us today.