When purchasing single-family rental properties, selecting a recently built home can offer both benefits and drawbacks. Newer properties tend to have better energy efficiency, customization options, and lower maintenance costs in the early years. However, the upfront price is typically higher, mainly due to the cost of upgrades and limited opportunities to negotiate. Whatever property you choose, it’s crucial to carefully consider both the advantages and disadvantages before making an investment.
Investing in New Construction Rental Properties Can Be a Smart Move
Investing in new construction for rental use can be a solid choice for many investors. A new home provides a clean, attractive rental property with modern upgrades included in the price, reducing the need for further repairs or renovations before tenants move in.
If the property is move-in ready, rental income can begin immediately. Additionally, the included upgrades allow for customization to attract different renter demographics. For example, smart technology features may appeal more to a Millennial renter than other features.
Benefits of Modern, Energy-Efficient Properties
Tenant appeal is crucial in any successful rental property, and new homes offer something older properties cannot: the chance for renters to be the first and only tenants to live in the house. Furthermore, new properties usually offer significant utility savings, as they tend to be more energy efficient. Renters seeking long-term leases may be drawn to modern, low-maintenance, energy-efficient homes.
Despite these advantages, there are some potential downsides. Not all builders offer the same quality, and some may cut corners by using cheap materials, which can lead to ongoing maintenance issues or higher repair costs.
Moreover, customization options are often limited. While there is some room for customization, the options are usually confined to a small range of finishes, and adding more can increase the price substantially.
Is New Construction Right for Your Investment?
If you’re an investor who prefers finding a good deal, a newly built home may not offer as much flexibility in terms of price. Builders often set the prices for new construction homes, leaving little room for negotiation.
Builders may be reluctant to lower prices since this can impact the comparable sales data for other homes in the area. However, it’s always worth asking about any discounts or financial incentives.
Before buying a new home for use as a rental property, carefully weighing the pros and cons is essential. Determining whether the property is a good fit for your market and renter demographics is key to a successful investment.
Partnering with Real Property Management Allies provides property owners in Cedartown with detailed market insights and expert advice to make informed decisions. For more information, contact us online or at 678-680-5065.
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.
