If you’re a real estate investor, your goal with each project is fairly simple: Don’t lose money and make a good return. Each investor will have a different strategy for attaining this goal, but most of the time it involves purchasing an existing property and either flipping it or holding on to it for rental income. Many investors overlook the prospect of a new construction project because they either don’t have experience with it, or are just worried about the added work of seeing the project through to completion. New construction can be a very profitable venture though, especially if you take the time to find a good area that’s in need of housing. Still not fully convinced? Here’s 4 reasons to consider a new construction project for your next investment.
New construction is in high demand
The nation’s housing market is going through an inventory shortage. There simply aren’t enough homes to compete with the ever-growing number of buyers in the market. This shortage presents a unique opportunity for investors though, who seek to benefit greatly from building homes in high-demand areas. On top of these gains, newly constructed homes often fetch a high sale price simply because they are new. They also look great and photograph well, which can help your listing rise to the top and get more views from potential buyers.
New construction eliminates the unknown
When you purchase an existing property, you run the risk of getting more than you bargained for and having to pay for extensive repairs that can kill your profits. Water and structural damage in particular are two things that can turn a potentially good deal into a bad one. These won’t be an issue with new construction properties, and going with one can help ensure that your investment ends up being profitable. If you plan to rent the property out afterwards, this also means less time and money spent on maintenance throughout the years, which brings us to our next point.
New construction costs less to maintain
The low cost of maintenance for newly constructed properties is another reason to consider investing in one. New properties are generally built with higher efficiency standards in mind for all aspects of the home. They use more efficient lights and appliances which can save owners on their water and electricity bills. New homes also costs less to heat and cool because they are better designed and usually better insulated than older properties are. This benefit can be very appealing to home buyers, who consider the higher price of a new home to be a tradeoff for the lower monthly bills that come with it.
New construction is built to spec
The great thing about new construction is that it gives you a blank slate to work with. You can build the property exactly how you had envisioned it, and this gives you the opportunity to stand out from the competition. If you’re planning to design a new construction property, you should look to incorporate modern design trends like open-concept and making good use of natural light. Remember that your goal is still to sell the property afterwards, so don’t go with any design decisions that may put off potential buyers. Consider the time spent designing the home as an investment; the better designed your property, the more likely you are to receive a good offer and make a sizeable return.
Are you looking to finance a new construction investment? RCN Capital lends to real estate professionals, commercial contractors & developers across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors. If you are an investor looking to acquire financing for a property, RCN Capital has competitive loan options available. Connect with us today to discuss your next real estate investment.