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
Purchasing a new property for rental use can be a smart investment. New construction offers the advantage of a clean, attractive rental home ready to go, with upgrades already factored into the price. This can minimize your out-of-pocket costs for repairs and improvements before the property is rented out.
If the new home is move-in ready, you can start earning rental income immediately. Additionally, the included upgrades allow you to customize the home to better match the preferences of certain renter demographics. For example, smart technology in a new home can be a draw for Millennial renters.
Benefits of Modern, Energy-Efficient Properties
Tenant appeal is key to rental success, and new homes offer tenants the opportunity to be the first and only people to live in the property. Beyond that, these homes often offer significant utility savings thanks to their energy-efficient designs. Renters interested in staying long-term may find the combination of a modern, low-maintenance, and energy-efficient home particularly appealing.
Despite these advantages, it’s important to keep in mind the potential downsides. Not all builders provide the same quality, and some may cut corners by using cheap materials, resulting in ongoing maintenance issues or higher repair costs.
Moreover, customization options are often limited. While some upgrades are available, they typically come with a small selection of finishes, and expanding the options can significantly raise the purchase price.
Is New Construction Right for Your Investment?
Investors seeking bargains may find new construction less appealing, as the price is often dictated by the builder rather than the market, leaving limited room for negotiation.
Builders may hesitate to reduce prices, as doing so could affect the comparative market data, making future sales more difficult. However, it’s always worth asking about any available discounts or financial incentives that may be offered.
Before buying a new home as a rental property, it’s crucial to weigh all the pros and cons. Assessing whether a new property is a good fit for your market and target renter demographics is essential.
At Real Property Management Home Together, we provide property owners in St. Augustine with the necessary market information and assessments to make informed decisions. For more information, contact us online or at 904-417-8988.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.
