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Newly constructed homes present a unique investment opportunity in 2024. Due to the ongoing inventory shortage, there are many markets across the US in need of new homes. Identifying one of these high demand markets can be a great opportunity for investors. Taking the time to carefully research and plan a construction project can also lead to significant returns. In this piece, we'll cover some of the main reasons why new construction investments are a smart move in 2024.
#1: Modern Amenities and Features
Building a new home means modern amenities and cutting-edge features that you don’t typically see. These features have two benefits, aside from requiring less maintenance there is something to be said about being the first person to live in a home and using all its new amenities for the first time. New properties attract a certain type of buyer, and these buyers are often willing to pay more for premium homes. Plus, modern homes tend to be built with modern design techniques like open concept and making good use of natural light.
You should also consider adding smart home technology such as security systems, doorbell cameras, thermostats, and lighting, as these features can be key selling points when marketing the property.
#2: Energy Efficiency
One of the greatest benefits of new properties is how far they have come with incorporating green design and energy efficiency. New homes are built with more efficient materials, and they are also designed with the goal of maximizing heating, cooling, and insulation. Choosing to build with environmentally friendly materials means you are often saving energy and the planet. Consider investing in quality windows, insulation, HVAC systems, or even solar panels to lower the home’s energy needs. Just like the property’s other modern amenities, these features tend to add value and can become marketable selling points in the property listing.
#3: Customization Options
When you build a property from the ground up, you have more control over how it gets built. Everything from materials, floor plans, and finishes can be customized. If you understand your buyer’s preferences, you can incorporate certain designs choices to ensure your property will appeal to them. You can even work directly with a buyer before construction begins, which gives them the ability to incorporate their design preferences from the start.
Many construction investors choose to build smaller townhouses or condos, as they can yield a better return on investment than a single property. Let’s consider a scenario. If you have $250,000 to invest, you can build a single-family home, or you can choose to build 2 townhomes for $125,000 each. The single-family home may sell for anywhere from $300,000-$400,000, with a maximum return of $150,000. The 2 newly constructed townhouses can sell anywhere from $175,000 to $225,000, with a maximum return of $100,000 on each property.
#4: Lower Maintenance Costs
A huge advantage of living in a new home is that there’s significantly less maintenance required, especially in the first few years. Not only are all the appliances and amenities on the property new, but they are often designed better, and require less energy too. And if anything does break, there’s a good chance it will still be under warranty. These savings are great if you plan to rent the property out after construction is completed, but they can also become benefits for the new owners you might sell your property to.
#5: A Stable Resale Value
New properties also make for attractive investments because they hold their resale value better than existing properties. Unlike a new car, a new home does not lose significant value in the first few years of ownership, and they will often appreciate in value. Advancements in design and technology means these properties appeal to a wider range of buyers, and the fact that there’s less maintenance required and new amenities to enjoy means demand for these properties is consistent. The best way to benefit from these qualities is by renting the home once it’s built. Renting your property allows you to recover a good portion of your construction costs, and you can sell the property a few years later for roughly the same amount as when it was new.
RCN Capital
The easiest way to save on a new construction investment is to 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.