New construction has consistently been a good way to make money with real estate investing. It offers strong returns to investors which can be taken even further with strategic planning and choosing a good location to build property. In order to make the greatest returns with new construction, investors will often partner with home developers to build entirely new neighborhoods. With the national housing shortage at an all-time high, now may be the best time to start a development project. Continue reading as we cover the key benefits of investing in housing developments along with some ways to maximize the return on this type of investment.
Investing in new construction makes good financial sense for a number of reasons. First, these properties are built with modern features in mind and have newer amenities which make them more appealing to homebuyers. That also means they fetch higher prices on the open market since they are more in demand. This quality helps ensure that the final sale price of a new home is higher than the cost of labor and materials used to build it, making it a sound investment. Plus, new properties often come with warranties and require less initial maintenance, which can become another selling point.
There’s significant value that can be added to a property if it’s built in a desirable area or neighborhood. When you invest in a housing development, you get the chance to create a community that grows over time, leading to a rise in property values. As the neighborhood becomes more settled and infrastructure grows to accommodate it, the overall desirability of the area increases as well. Take some time to conduct research and identify a growing market that would make for a good investment. It can lead to even greater returns over time with price appreciation.
When investing in the construction of a housing development, the greatest gains are seen at the end of the project, when all work has been completed. By building multiple properties, you can benefit from economies of scale by ordering materials in bulk and spreading expenses across all the construction sites. The more properties you build, the greater your return becomes on each home. And as the project nears completion, you will begin to see appreciation from a growing community and other developments in the same area as the neighborhood. You may also want to consider premanufactured homes, which are a great option for building in bulk.
As always, in real estate one of the most crucial factors in determining value is location. Homebuyers are more willing to pay for properties in communities with access to good schools, shopping centers, entertainment, and convenient public transportation. It can be worth taking time to find a perfect location for a housing development to really maximize the return on the investment. The closer the neighborhood is to these desirable amenities, the higher the value of each property in the development. Additionally, homes in desirable locations experience lower vacancy rates, making them a more stable long-term investments.
Remember that you don’t have to limit yourself to markets near you for housing development projects. You should conduct market research on different parts of the country in order to find a promising market. Cities that are experiencing high population growth or rapidly growing job markets are a good choice, as well as the surrounding towns which will see a population influx as a result. The increased demand for housing will lead to higher home prices, and opportunities for new developments to be built.
If you want to save on a new construction investment, work with a trusted lender that can get you the best leverages and rates. 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 construction project, RCN Capital has competitive loan options available. Connect with us today to discuss your next real estate investment.