Buying new construction as a rental property is something you might not have thought about. Today, more than ever, people are buying brand new homes and turning those into rental property. This has occurred over the last five or six years, all brought on by the private equity groups that have come to Atlanta and gobbled up all the rental properties.
These investors have been in the business for many years now, and they have realized that older properties can have problems that cost a lot of money. So, with their expansive data and all the calculations they’ve done on cap rate returns, they have found it very valuable to buy new construction and turn those into rental properties.
New Construction Brings Better Tenants
With new construction properties, you are attracting the best tenants in your area. You have the newest home and modern finishes. It presents better than other properties on the market. Builders typically build only in communities that are up and coming areas. So, those homes are going to be the most attractive homes and located in the best neighborhoods. You’ll get the most attractive tenants.
New Construction Brings Lower Maintenance Costs
Maintenance costs can be one of our biggest challenges when we’re talking about rental property. Brand new construction typically gets a one year warranty. You can get an additional warranty on top of that which extends for many years for very little money. Essentially, you have several years of maintenance-free management.
There probably won’t be foundation issues, roof repairs, or anything major for 10 years or more. New homes today are built to higher standards, so we won’t have some of those issues that we have with older homes. Trees will not encroach into the drain lines and cause gutter problems. The maintenance items go on and on, so new construction is a valuable consideration when you’re thinking about rental property.
Short Term versus Long Term Investments
Some investors may worry that initial returns will be lower because the cost of the house you buy is higher. In the short term, this is true. You’re paying a premium for a new construction home. But in the long term, you can own your investment for 20 years. So, owning new construction can be an awesome way to invest in rental property.