There are just two fundamental categories of residential real estate you can invest in newly built homes and properties already in use. Resale properties are typically bought straight from the owner, who has either lived there themselves or has rented it out to renters. Usually, you don’t buy them from a builder or developer.
Direct purchases from the builder or developer who built the property are known as new construction real estate properties. We call them brand-new properties. Purchasing real estate under construction can provide investors with many benefits.
As they are frequently constructed in growing areas and offer modern facilities, they tend to increase in value more quickly than older properties.
Modern amenities and energy-saving features in new construction real estate may make them more renter-friendly than older homes. Purchasing a newly built house may also offer tax benefits, such as the ability to deduct mortgage interest and property taxes, as well as a lower first-year property tax rate.
You will likely buy resale homes if your investment strategy focuses on pre-foreclosure, foreclosure, bank-owned property (REOs), or probate sales. However, sometimes REOs are brand-new construction homes because the bank foreclosed on the developer or builder who created the home but could not sell it before the foreclosure.
7 Benefits of Investing in New Construction Real Estate
Here are some of the many benefits of investing in new construction real estate:
Small Deposits
Builders often demand a fairly small deposit to secure a contract for a newly built residence. A down payment amount might be 10% of the purchasing price. This is occasionally negotiable and represents a significant benefit for investors who want to keep their out-of-pocket expenses to a minimum until the closing date.
This is true for new and pre-construction homes, where construction begins after your purchase contract and down payment have been approved.
A small builder deposit enables some investors to benefit by “flipping” or assigning their purchase contract to other investors for a fee during real estate booms with higher-than-average appreciation. This only makes sense if the second investor gains from the property’s equity by receiving discounts and appreciation while the project is being built. However, this is uncommon in the market nowadays.
Low Maintenance and Repair
Recently built properties need fewer repairs and maintenance than older ones, which can help keep costs down. Unlike real estate that has previously been owned, new construction real estate comes with a builder’s warranty that is required by law. Typically, warranties last up to two years and cover all systems (electrical, plumbing, heating, air conditioning, etc.), materials, and workmanship.
A 10-year warranty and other significant structural components cover the foundation and basement walls. If the seller bought the warranty, resale property rarely comes with one. These warranties, however, have restrictions and are less comprehensive than those on real estate that has just been built.
In addition, resale real estate that has undergone modifications can not adhere to current construction regulations. They might have hazardous building materials like asbestos or lead paint and be less energy-efficient.
Growth and Emerging Markets
In emerging and developing markets, new construction real estate is constantly present. If you’re a real estate investor, put your money here to minimize risk and increase long-term appreciation. Even though you could invest in real estate already on the market, you would forfeit the other advantages this article has discussed.
Always do your homework and examine the markets you’re thinking about. Buying a brand-new home in a place where commuting to work, shopping, and other essential facilities takes a lengthy time could put you too far ahead of the rental market curve.
Appreciation
Numerous real estate experts have concluded that new build houses tend to value more quickly than their resale equivalents. Retail businesses, schools, and other amenities quickly spring up in new projects as more people move in to serve the expanding population. As more people settle in the region, increasing demand and establishing the community helps raise property values.
Discounts and Instant Equity
There are instances where buying the new building from a builder early in the development process might give you access to early bird prices or substantial discounts. Buying real estate from a builder for 5% to 20% less than market value is not unusual.
Why would the builder offer to sell your home for less? One motive is that they may continue to build more real estate by attracting lender financing by maintaining high sales and low debt levels. A builder’s product being in high demand lowers the risk for the lender providing loans to that builder.
Customization and Cost Control
If you buy a pre-construction property, you receive the added benefit of tailoring the property to meet your needs. The fact that you can choose many amenities, including flooring, cabinetry, lighting, plumbing, and fixtures, is undoubtedly a perk of purchasing a property still under construction. This is helpful when minimizing expenses while making it as sturdy and desirable to potential tenants as possible. In most brand-new developments, you can even pick the placement of your lot.
Newer Technology
New construction real estate properties have better construction and more modern, long-lasting building materials than resale buildings. Modern insulation technology offers much more comfort and energy efficiency than it did in the past. Additionally, indoor air quality is much improved due to advancements in HVAC systems.
In general, New construction real estate is more suitable as investment property than properties already sold. Simply put, they require less upkeep, are healthier, and use less energy. They can be purchased in developing countries for minimal up-front payments, frequently at prices below market. There are no surprises, meaning you will have less anxiety and tension.
Conclusion:
It’s vital to remember that investing in real estate under development has its difficulties, such as managing construction delays and unforeseen costs. It might also require more money upfront, but the payoff could be a high-demand property with a high rate of return on investment.
Think Beyond Construction: Building Dreams, Crafting Legacies
Looking for the best in new construction real estate in the vibrant city of Houston, Texas? Look no further! Think Beyond Construction is here to transform your vision into reality. We are not just another real estate agency but your partners in creating the home of your dreams.
Unmatched Expertise: Our team comprises seasoned professionals with deep knowledge of the Houston market. We stay ahead of trends and deliver properties at the forefront of design, innovation, and comfort.
Customized Solutions: Your dream home is unique, and we understand that. We go beyond cookie-cutter approaches and offer tailored solutions to meet your needs and desires. From architectural design to finishing touches, we craft residences that reflect your style and personality.
Superior Craftsmanship: We are committed to delivering excellence in construction. Our skilled artisans meticulously build every home with the utmost care, using top-quality materials. Our attention to detail ensures a superior finished product that stands the test of time.
Transparent and Trustworthy: At Think Beyond Construction, transparency is at the core of our operations. We believe in fostering trust and open communication throughout the entire process. From the initial consultation to the final walkthrough, you’ll have peace of mind knowing you’re working with a team that prioritizes your satisfaction.
Your Vision, Our Mission: We understand that purchasing a new construction property is an investment in your future. Our mission is to make that investment worthwhile, exceeding your expectations every step of the way. Your dreams are our inspiration, and we’re dedicated to turning them into tangible, breathtaking realities.
Take the First Step: Refrain from settling for the ordinary when you can have the extraordinary. Contact Think Beyond Construction today, and let us guide you through creating your dream home in Houston, Texas. Together, we’ll build a legacy that will last for generations.
Think Beyond Construction: Where Dreams Become Addressed!
