When buying single-family rental properties, opting for a recently built home can offer both advantages and disadvantages. Newer properties tend to offer better energy efficiency, more opportunities for customization, and reduced maintenance needs in the early years. However, these benefits can come with higher upfront costs, as upgrades are usually expensive and negotiating the price is often difficult. No matter the property, it’s important 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 property to utilize as a rental can be a promising investment for many reasons. Investors who opt for new construction can acquire a ready-to-rent, attractive rental home that comes with numerous upgrades included in the price. This eliminates the need for out-of-pocket repair costs, making it easier to get the property ready for your first tenant.
Additionally, if the new home is immediately move-in ready, you can begin earning rental income without delay. The upgrades included in new homes also allow investors to customize the property, potentially attracting a certain renter demographic, such as a Millennial renter drawn to smart technologies.
Benefits of Modern, Energy-Efficient Properties
Tenant appeal is a significant factor in determining the success of any rental property. New homes provide renters with the chance to be the first and only tenant who has lived in the property. Beyond that, these homes tend to be more energy efficient, offering renters significant utility savings. This combination of modern, low-maintenance, energy-efficient features can attract long-term renters looking to settle in a comfortable, modern space.
Still, there are a few downsides to consider. Not all builders deliver the same quality, and some may use cheaper materials in an effort to cut costs. This can result in higher repair and maintenance expenses down the line. Another downside is that customization is often limited to a degree, and opting for more personalized features can drive up the price.
Is New Construction Right for Your Investment?
If you’re an investor who enjoys negotiating prices or finding a bargain, new construction homes may not offer much flexibility. Builders typically set the price, and it’s often hard to negotiate lower due to how it could impact future sales in the neighborhood.
However, it’s always wise to ask about potential discounts or financial incentives. Even if the builder isn’t willing to negotiate much on price, there might be other perks they can offer.
Before buying a newly built home for rental purposes, it’s important to consider all the pros and cons. Determining whether the property is right for your market and renter demographic is key to making a wise investment.
At Real Property Management Ignite, we provide Tumalo property owners with the market insights and tools they need to make informed investment decisions. To learn more, contact us online or at 541-550-7002.
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