Newly built homes can be an excellent investment, particularly for landlords who want to avoid the constant care and repairs that come with older homes. Real estate investors’ primary goal is to find a property that generates a reasonable return on their investment. In an up-and-coming neighbourhood with significant rental demand, a new build investment property can yield exceptional profits.
BENEFITS OF BUYING NEW CONSTRUCTION INVESTMENT PROPERTY
Appreciation & Instant Equity
New construction homes are a good strategy for investors looking for growth. Investing in new and emerging areas can boost the rate of appreciation of your property and help you build equity faster. Because appreciation is never guaranteed, conduct a competitive market analysis before purchasing. You may be confident that your home will appreciate it if you know the market is growing and there is considerable rental demand.
In some cases, purchasing new construction from a builder early in the development process might provide you with early bird prices or large discounts. It is not uncommon to buy property from a builder for a discount of 5% to 20% below market value. Why would a builder sell you a home at a reduced price? One reason is that they want to keep their sales high and their debts low so they can get lender funding to build additional property. Having buyers lined up to buy the builder’s product minimizes the risk of the lender providing that builder with a loan. Customization and Cost Control When you buy a pre-construction home, you get the added benefit of being able to modify it to your specifications. The ability to choose various aspects such as flooring, cabinetry, lighting, plumbing, and fixtures is an obvious advantage of purchasing a pre-construction house. When you want to keep your costs low while keeping it as durable and desirable to future tenants as possible, this is a good option. In most new subdivisions, you can even choose the location of your lot.
In comparison to resale buildings, new construction properties have better construction and more modern, longer-lasting building materials. Insulation technology has advanced significantly in recent years, resulting in increased comfort and energy efficiency. Furthermore, indoor air quality has greatly improved as a result of advancements in heating and air conditioning systems.
People Like Living in New Homes
We have a remarkable ability to adapt to our circumstances as humans. For example, a squeaky ceiling fan may initially drive you insane, but after a while, you don’t even notice it. We grow bored easily because we become accustomed to our surroundings. The majority of us enjoy flashy, new items. Why do you believe so many individuals opt to lease their cars? For many people, the joy of driving down the street in a brand-new car every two or three years surpasses the cost. When the “new car feeling” wears off, they might start looking for their next lease automobile and repeat the process. New construction homes have a cleaner feel to them and often have open floor plans.
Growth and Emerging Markets
In growth and emerging markets, there is constantly new construction. As a real estate investor, this is where you want to put your money to minimize risk and maximize long-term growth. You could invest in resale property in these same growth markets, but you’d miss out on the other advantages discussed in this article. As always, do your homework and examine the markets you’re contemplating. Purchasing new property in places where work, shopping, and other vital amenities are a long travel away may put you too far ahead of the curve, reducing the rental potential of your investment.
Overall, freshly developed real estate is better suited as investment property than resale residences. Simply put, they are more energy-efficient, healthier, and require less upkeep. They can be purchased in emerging countries with minimal initial payments and frequently at a discount to market value. There are no surprises, which means less anxiety and stress for you.