There are both advantages and disadvantages when purchasing single-family rental properties. Newer properties may cost more up front, but they also provide perks like more customization, higher energy efficiency, and less maintenance in the first several years. This is typically the case due to the high cost of improvements and the limited space for price negotiation. Any 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 to use as a rental can be a promising investment in many ways. In terms of affordability, new building provides investors the chance to buy and immediately rent out a clean, attractive rental home with numerous gorgeous enhancements. There won’t be a lot of out-of-pocket expenses to get the property ready for your first tenant because the upgrades are included in the sale price.
Rental revenue might start right away if the new home is immediately ready for occupancy. Investors can customize the rental home to appeal to a specific renter demographic by using a variety of upgrades included in the price of a new home. A new home that has been renovated with smart technologies, for instance, will likely appeal to a Millennial renter more than one that has not.
Benefits of Modern, Energy-Efficient Properties
A new home offers renters something older properties cannot: the opportunity to be the first and only tenant who has lived in the house. Tenant appeal is a crucial component of any successful rental property. Because newer properties are typically more energy efficient all over, renting a new property also provides tenants significant utility savings. This home’s modern design, low maintenance requirements, and energy efficiency are sure to appeal to long-term tenants.
All things considered; these are strong arguments in favor of purchasing a new home as your next rental property. However, you should also be aware of the following drawbacks. It’s crucial to keep in mind, for instance, that not all builders are created equal, and some may use cheap materials or try to save money in other ways.
Shoddy construction might result in a lot of haggling with the builder to get things done right, as well as higher repair and maintenance costs if you can’t get them to perform the job right. The restricted number of options accessible is another negative aspect. Although there is a degree of customization available, most of the time it is a matter of choosing between a limited selection of wall colors, countertop types, etc., or risk driving the purchase price up.
Is New Construction Right for Your Investment?
If you’re an investor who likes a good bargain, buying a new home might not be the best choice. There is often leeway for negotiation in the price of new construction because it is not necessarily set by the market or a previous owner.
Because lowering the base prices on their homes changes the data on comparable properties in the area and encourages future buyers to try to negotiate with them as well, buying from a builder may make them less amenable to negotiation. It’s always a good idea to ask for any available discounts or other financial incentives, as things can and will vary depending on the situation.
Before purchasing a new home to utilize as a rental property, it is crucial to consider all of the benefits and drawbacks. It can be challenging to determine whether a new property is a good investment for your market and demographics, though, because there are so many factors to consider.
You need detailed market information, like the kind offered to all Roslindale property owners working with Real Property Management Boston. We perform market assessments for all potential rental properties, ensuring owners who partner with us have the tools and information they need to make the best investment decisions. For more information, contact us online or at 832-701-0766.
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