4 Things to Know Before Investing in New Construction

New Construction properties are great because they offer investors the opportunity to generate a huge return-on-investment (ROI) when compared to flipping existing properties. Along with the many benefits of new construction properties, buyers flock to these properties simply because they’re new. However, if you choose to go with a new construction for your next real estate investment, there are a few things you should know about that can affect the process. Let’s go over some of these items to help make you more informed before your next new construction investment.

Make sure to have a plan

Having a solid plan, and sticking to it, is perhaps the most important thing when building a new property. There are plenty of issues that may come up throughout the process, but having a well-made plan with defined timelines ensures your project stays on schedule which can save you time and money. Most lenders are going to require a plan before approving a loan for a new construction, and even if they don’t, they’re more likely to approve your application if you have one. Finally, you may want to consider working with a real estate agent during the process. They may be able to help you make better informed decisions, or even help negotiate with the builder and lender.

Timeline complications are likely to happen

Even the best laid plans can run into issues at some point or another. That’s why it’s important to set your expectations before-hand, and to have contingencies for problems that may arise. Also, with shipping delays and the shortage of building materials currently affecting the market, you may want to discuss factors that can affect construction with your builder. They’re going to be your best resource for dealing with snags, since they’re likely to have dealt with them before, and they’re also likely to have the quickest solution for common issues.

It’s a good idea to negotiate with your builder

You may think that your builder’s prices are set in stone, since they’re the ones that know exactly how much it costs to build the property. However, you’ll find that this isn’t necessarily the case. In fact, negotiating prices with your builder could be an easy way to save thousands on the home’s construction. If they really aren’t budging on pricing, you can try to negotiate upgrades for the home instead. They may be able to offer you free or steeply discounted upgrades that can significantly increase the value of the property. Bottom line, it’s always worth giving negotiating a shot.

You don’t have to go with your builder’s lender

Contractors and builders may have a certain lender that they prefer to work with, and will most likely suggest you take a loan out with them for the building process. They might swear this lender has the best rates available, or maybe even offer incentives to go with them. However, it’s important you still do your homework and look into rates and programs from other lenders. That way, you can be sure you’re actually getting the best rates available and aren’t locked into a loan that you would have been better off avoiding. Either way, it’s important to choose a reputable lender that has experience in the new construction space to simplify process and make it as seamless as it can be.

RCN Capital

RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners 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 finance a new construction, RCN Capital has competitive loan options available. Connect with us today to discuss your next real estate investment.

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