When purchasing single-family rental properties, choosing a recently built home presents both pros and cons. Newer homes generally offer better energy efficiency, more options for customization, and reduced maintenance during the initial years. However, these perks often come with a higher upfront cost, as upgrades can be pricey, and negotiations are usually limited. No matter which property you choose, evaluating 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
Investing in new construction can be a promising move for rental property investors. With new homes, investors can buy a property ready for immediate rental, with upgrades included in the purchase price. This can reduce any extra costs related to preparing the home for tenants.
If the new home is move-in ready, you can begin earning rental income right away. The built-in upgrades also provide opportunities to customize the property to attract certain renter demographics. For example, a home equipped with smart technology is likely to appeal more to a Millennial renter.
Benefits of Modern, Energy-Efficient Properties
Tenant appeal is an essential aspect of a 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 home. Newer homes also offer significant utility savings, thanks to their energy-efficient designs. Renters who are looking for long-term homes may be especially attracted to the idea of living in a modern, low-maintenance, energy-efficient property.
Although there are many benefits, there are also potential downsides. Not all builders maintain the same level of quality, and some may cut corners by using cheaper materials. This could result in maintenance issues or higher repair costs down the line.
Another drawback is the limited options for customization. While some customization is available, it’s usually restricted to a small range of finishes and features. Adding more customization options can drive the purchase price higher.
Is New Construction Right for Your Investment?
If you’re an investor focused on finding a good deal, buying new construction might not always be the best choice. The price of new homes is typically set by the builder, leaving little room for negotiation.
Builders may resist lowering prices because it can affect the market data for comparable homes in the area, making it harder to sell future properties. However, it’s worth asking about any available discounts or financial incentives.
Before purchasing a new home for rental purposes, it’s important to consider all the pros and cons. Determining whether a new home is the right investment for your market and renter demographics is a key step in making an informed decision.
With Real Property Management Titan, property owners in Franklin can access detailed market assessments and data to help make the best investment decisions. For more information, contact us online or at 615-538-7711.
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