When investing in single-family rental properties, choosing a recently built home comes with both advantages and disadvantages. Newer homes tend to offer better energy efficiency, more customization options, and lower maintenance costs in the early years. However, these benefits come with higher upfront costs, as upgrades can be expensive and there’s often limited flexibility for price negotiations. Whatever 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
Buying a new home to use as a rental can be a smart move for investors. New construction homes allow investors to purchase a property that’s immediately ready for rental, complete with modern upgrades included in the purchase price. This helps reduce the need for additional repairs or expenses before tenants move in.
If the home is move-in ready, you can start earning rental income right away. Additionally, the included upgrades can help customize the home to appeal to different renter demographics. For instance, a home with smart technology could attract Millennial renters more than a property lacking these features.
Benefits of Modern, Energy-Efficient Properties
Tenant appeal is a key factor in the success of any rental property, and new homes offer something older homes cannot: the opportunity for tenants to be the first and only renters to occupy the property. Additionally, new homes often offer significant utility savings due to their energy-efficient design, which can appeal to renters looking for a long-term stay. The combination of a modern, low-maintenance, and energy-efficient home may be particularly attractive to such tenants.
While there are several good reasons to invest in a newly built home, there are also potential downsides. Not all builders deliver the same quality of work, and some may cut corners by using cheaper materials. This can lead to more maintenance issues or higher repair costs in the future.
Additionally, customization options are often limited. While you may have some ability to choose finishes or features, the options are generally minimal, and adding more customizations can raise the price significantly.
Is New Construction Right for Your Investment?
If you’re an investor who enjoys finding good deals, purchasing a new construction home might not be your best option. The price of new homes is typically set by the builder, which limits room for negotiation.
Builders may be hesitant to reduce prices, as doing so could affect the comparable sales data for the area, making it harder for them to sell homes in the future. However, it’s always worth asking about available discounts or financial incentives.
Before buying a new home to use as a rental, it’s essential to evaluate all the pros and cons. Deciding whether a new property is the right investment for your market and demographics requires careful consideration.
To help you make the best investment decisions, Real Property Management Absolute offers property owners in Manchester detailed market assessments and guidance. For more information, contact us online or at 603-242-2727.
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