Real estate investors have two main investment property options: resale homes and new construction. Each has advantages and disadvantages that must be considered before making an investment decision.
New construction homes often feature modern amenities that increase resale value and decrease maintenance costs. These features include energy-efficient appliances, building materials, low-VOC paints, and flooring.
Cost
New construction homes in Rutherford County, TN, cost more than existing properties. However, this gap has narrowed during the COVID era as builders seek to compete with more affordable pre-owned options.
The good news is that many buyers who feared the price tag of a new construction home now find they can afford one, particularly when considering energy efficiency, fewer maintenance expenses, and warranties.
For those looking to build a new construction home, selecting a quality builder that routinely builds and sells homes similar to the home you hope to create is essential. Your real estate agent can help guide you to an appropriate builder.
Additionally, financing can play out differently depending on the type of home you’re building or purchasing within a new construction community. Some people use two loans to buy and develop, while others take out a single mortgage that converts into a permanent loan once the home is finished. Your Realtor and loan officer can walk you through the specifics of the loan process and timeline.
Energy Efficiency
The energy efficiency of a new construction home is often one of the biggest draws for buyers. Unlike older homes, where you may have to spend a lot of money upgrading outdated appliances and heating and cooling systems, new homes are built with modern insulation and other energy-saving materials. This will help reduce your utility bills and save you money over time.
In addition, new homes are typically wired for today’s technology. They’re more likely to be equipped with a smart thermostat, and they’re also more likely to have double-paned windows that are better at keeping heat inside in winter and outside in summer.
With all the perks of buying a new construction home, it’s essential to consider what you want in your next house before deciding whether a brand-new home is right for you. And, just like resale homes, it’s wise to have your real estate agent working with you to find the best deal and to guide you through the entire process. You’ll also want to know about potential HOA fees and other perks in your homeowner’s association dues.
Appearance
A new construction home has that “new car” smell that attracts many buyers. It also offers the benefit of a clean, unmarked property with modern features, including updated plumbing and electrical systems.
The floor plan of a new home is often designed with today’s family in mind, allowing for open spaces and a kitchen that flows into the family room. This can be an advantage for those who want to avoid the time and expense of renovations that come with resale homes.
While buying a new construction home can seem daunting, a knowledgeable buyer’s agent is critical to navigating the process. Your real estate professional can help you find a builder with a reputation for quality and an experienced team. They can also guide you through the mortgage preapproval process, which can be lengthy for new construction.
Ultimately, purchasing a new construction home depends on your needs and budget. But with some research and patience, the financial and emotional rewards outweigh the challenges. You could live your best life in a brand-new house before you know it!
Warranty
New construction homes typically have a warranty protecting components like plumbing, appliances, and heating. This can help ease the mind of buyers concerned about maintenance costs.
While a warranty is essential, it is not the only reason to consider a new construction home. For example, some builders offer incentives to first buyers in development or provide upgrades such as kitchen islands, wood floors, recessed lighting, and fireplaces. These can add up to significant savings over buying an existing home with similar features.
When choosing a build option, choose a builder familiar with the area and offer opportunities to customize your home to fit your needs. Work with a buyer’s agent who has your best interests at heart. They should be able to explain the entire process of purchasing a new construction home. Getting a home inspection before closing on your new home is also a good idea to be aware of potential issues that could cost you later. Lastly, remember that new construction homes often have small lots and sparse landscaping that is hard to compare with decades-old landscaping of an existing home.
Rentability
For several reasons, new construction homes can be worth the investment as a rental property. First, they are generally built in desirable areas with good schools, safe streets, and well-kept public parks. This attracts tenants who will be more likely to take care of the home and respect it as their own. This makes it easier to get the home rented and can help increase its overall value over time.
Another benefit of a new construction home is that it will be more energy-efficient than an older home, saving you money on utility bills. This can also help you generate more income from your rental property.
However, it is essential to remember that a new construction home will usually cost more than an existing home. This is because builders want to make a profit, and they will only be willing to negotiate a little on the price of the house. If you add any upgrades to the home, this will also increase its cost. These costs can be challenging to budget for when buying a new construction property.