With housing demand reaching record levels, new construction can be a great pathway for those looking to acquire real estate property. For investors, these homes offer the chance to make great returns, since they are often worth more than the cost of labor and materials used to build them. If you have never dealt with new construction property before, you will have plenty to learn, especially since there are so many decisions you’ll need to make along the way. And if you’re looking to sell the property afterwards, there are a few items to keep in mind if you want to maximize the value of your investment. In this article, we go over some tips that will help ensure your next new construction project goes smoothly.
Choose a good location
New construction is great because you get to decide exactly where you will build the property. Building in a great neighborhood means it will be easier when it comes time to sell, and it can even bring up your property’s value. You may also want to consider an area with other new construction properties, since your home is likely to increase in value as the neighborhood develops over time. Finally, remember that you don’t have to limit yourself to markets near you. All across the US, there are rapidly growing “hot” markets, and capitalizing on the demand in these areas can lead to great returns for you.
Leave some extra room in your budget
When you’re calculating your budget, you should leave a buffer to help cover any unexpected costs or fees you didn’t think to account for. The general recommendation is to overestimate your final budget by around 10%. This is especially true if you don’t have experience with new construction since you may not know the exact costs for each item. Also, with supply chain restrictions still affecting many building materials, there may be certain goods that end up costing more than expected. Accounting for these issues beforehand can save you a headache should they occur to you.
Take advantage of professional services
Building a new property from the ground up is a monumental task, and you should rely on the help of professionals to make the process smoother for you. Before you even start construction, you should definitely work with an architect for the design and floor plan of your property. They will likely have recommendations that will make your space better and easier to live in, and they can also point out flaws you never thought to consider.
While you will definitely be working with a builder, you can also tap them for ideas that can save you time and money, and they may even have interior suggestions to help you appeal to buyers. Finally, you will want to hire an experienced real estate agent to assist with the sale of your property. They’ll be able to find a buyer for you and ensure you receive a fair offer on the home, so that you can end up with a good return on your investment.
Learn to negotiate
Investing in real estate, and particularly new construction properties, will require you to have skills that not everyone has. The art of negotiation will be essential here since you’ll be looking to get the most value possible out of your investment. You may be able to negotiate with your builder when it comes to pricing, and if they aren’t willing to budge they may be willing to include free upgrades like higher-quality flooring or appliances. Also, when you are looking to sell the home, negotiating will be crucial so that you don’t end up on the wrong end of a bad deal. Taking the time to learn this skill can save you heaps, and it will come in handy across all types of investment and business endeavors.
Work with a trusted real estate lender
The easiest way to save on your new construction investment is to work with a trusted lender that can give you the best leverages and rates. 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.