When purchasing single-family rental properties, considering a recently built home comes with both benefits and drawbacks. Newer homes often provide higher energy efficiency, customization options, and minimal maintenance in the first few years. However, these perks frequently come at a higher price due to the cost of upgrades, and there’s generally limited room for price negotiations. Whichever property you choose, weighing the advantages and disadvantages is essential to ensure a solid return on investment.
Investing in New Construction Rental Properties Can Be a Smart Move
Investing in a new construction home as a rental can be a strategic move for many investors. Newly built homes allow investors to acquire rental-ready properties, complete with attractive upgrades already included in the price. This can minimize any additional costs related to repairs or renovations before your first tenant moves in.
If the new home is move-in ready, rental income can start immediately. The included upgrades can also help tailor the property to attract specific renter demographics. For instance, homes with smart technology may have stronger appeal to a Millennial renter.
Benefits of Modern, Energy-Efficient Properties
Tenant appeal is critical to any successful rental property, and new homes offer an exclusive benefit: the chance for renters to be the first and only tenants to live in the home. Moreover, these properties typically provide significant utility savings due to their energy-efficient designs. Renters looking to stay long-term may be particularly attracted to a modern, low-maintenance, energy-efficient home.
While these factors are compelling reasons to invest in a newly built home, potential downsides exist as well. Some builders may cut costs by using cheap materials, leading to potential maintenance issues or higher repair expenses over time.
Customization options can also be limited. While some upgrades are available, they may be restricted to basic choices, and expanding those options could increase the purchase price even more.
Is New Construction Right for Your Investment?
Investors who prefer bargains may find that purchasing new construction offers little room for negotiation. The prices of new homes are usually set by the builder, with limited flexibility.
Builders may be unwilling to lower prices, as doing so could affect the comparable market data for other homes in the neighborhood. However, it’s always a good idea to ask about available discounts or financial incentives.
Before deciding to purchase a newly built home for rental purposes, it’s important to consider both the pros and cons carefully. Understanding whether a new property is a good fit for your market and renter demographics is key to making a sound investment.
At Real Property Management NC East, we offer property owners in Goldsboro market assessments and insights to help them make informed decisions. For more information, contact us online or at 252-298-5151.
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