The Benefits
of Buying Brand New Homes
By Adiel Gorel
Buying a brandnew home offers many advantages for investors . Of course , the house is new , and everything is ( or should be ) in perfect condition . If there are any flaws , they ’ ll be repaired under the homebuilder ’ s warranty . You won ’ t have to worry about repairs and refurbishments for at least the first few years . There ’ s no need to paint , put in new wallpaper or new carpet . For busy investors , new homes are a godsend .
Some items within the home are also under the manufacturer ’ s warranty , items such as the HVAC system , the water heater , appliances , etc .
Also , because you ’ re buying the house knowing it will be a rental property , you can select the floor coverings , finishes , and appliances that will work best in a rental home . You ’ ll want to choose neutral colors and durable ( but not pricey ) floor coverings , and appliances that can withstand the wear and tear of tenant turnover . Keeping an eye toward utility , not cosmetic beauty , will keep your initial costs down and minimize future replacement costs . Of course , I always recommend to let the
Photo by Max Vakhtbovych from Pexels
local teams , REALTORS ® and property managers , do the choosing . They are attuned to the needs of their local market and what tenants there will like .
Another bonus of buying new homes is that it ’ s possible to negotiate with builders for added amenities . We ( ICG ) usually give builders a significant volume of sales when our investors and I buy through our local brokers , making everyone a “ large client ” ( even if they just bought one home ). This , in some cases , allows our local brokers to eke out extra benefits for our investors . Often the price of new homes is fixed , but builders are willing to offer upgrades such as a tile entry , an appliance package , or other extras at no extra cost . Also , builders are often more willing than private owners to structure a deal that benefits you .
When you buy brand new homes , there is another intriguing benefit . You can possibly earn equity before you ’ ve closed escrow . How ? Purchasing a new home occurs in two stages . First , you sign a contract with the builder and make an earnest money deposit of a few thousand dollars . You don ’ t have to come up with the down payment until the house is completed , usually months later ( although sometimes brandnew homes can be ready now , as I explain below ). Currently , in the Sun Belt regions we are investing in , often the property value rises between signing and closing . Many investors have purchased homes that have appreciated a couple of percentage points in less than six months . If someone wonders what happens if prices fall during the building period , you can easily back away from the deal , if you choose , at a minimal cost .
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