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Pros and Cons of Investing in a Newly Built Home

Newly built houses lined up, with construction equipment and materials visible, highlighting the development process.Buying single-family rental residences isn’t without its pros and cons. Although newer homes may have a higher initial investment, they also provide benefits such as greater customization, higher energy efficiency, and less maintenance during the first few years. Reasons for this include the high cost of renovations and the restricted room 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

It can be a promising investment in many ways to buy new property to utilize as a rental. In terms of cost-effectiveness, new construction offers investors the chance to buy and immediately rent out a clean, attractive rental home with many beautiful upgrades. Because the upgrades are included in the sale price, there won’t be many out-of-pocket costs to get the property ready for your first tenant.

If the new home is immediately ready for occupation, rental revenue might start right away. By utilizing a number of upgrades included in the price of a new home, investors can customize the rental home to appeal to a certain renter demographic. For example, a Millennial renter will be more drawn to a new home that has been upgraded with smart technologies than one that has not.

Benefits of Modern, Energy-Efficient Properties

The chance to be the first and only tenant who has lived in the house is something that tenants cannot get with older houses. A successful rental property must have tenant appeal. Tenants who rent a new property also benefit from significant utility savings because newer properties are often more energy efficient overall. Encouraging long-term tenants with its modern design, low maintenance needs, and energy efficiency is a guaranteed bet.

When everything is taken into account, there are compelling reasons to buy a new home as your next rental property. Having said that, keep in mind the following downsides as well. For example, it’s important to remember that not all builders are the same; some may use cheap materials or look for other ways to save money.

If you can’t get the builder to do the job right, you might have to spend more money on repairs and maintenance. Another disadvantage is the limited number of options available. Although there is a degree of customization possible, in most cases it is a matter of choosing between a small number of wall colors, countertop kinds, etc., or risk driving the purchase price up.

Is New Construction Right for Your Investment?

A new home purchase might not be the ideal option if you’re an investor who likes a good bargain. Because the price of new construction is not always determined by the market or a previous owner, there is often room for negotiation there.
Buying from a builder might make them less receptive to negotiation because decreasing the base prices on their homes changes the data on comparable properties in the area and encourages future buyers to want to deal with them as well. Ask for any available discounts or other financial incentives because circumstances can and will change.
Consider all the advantages and disadvantages before buying a new home to use as a rental property. However, with so many variables to think about, it can be difficult to discern whether a new property is an excellent investment for your market and demographics.

You need detailed market information, like the kind offered to all Houston property owners working with Real Property Management One Source. 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 214-721-0727
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