Is This The Right Time To Buy New Construction As Investment Property?

The good thing about real estate investing is that it can lead to a steady stream of passive income. And while there are several ways to achieve this goal (for example, real estate investment trusts, or REITs), the proven strategy has long been to buy income properties.

Income properties offer real estate investors two ways to make money. First, homes have the potential to gain value over time where investors can unlock profit. Second, income properties in the right market can lead to many years of reliable rent payments. 

This is money that investors can use to pay their expenses or reinvest to grow their assets.

Now, some real estate investors may shy away from buying new construction properties. Reason? They can be very expensive to own compared to the cost of existing homes, which have not increased significantly.

Simply put, renters who need to rent may be more willing to settle for an outdated property than your average home buyer because leases are often not permanent or long-term. 

Thus, it may be more difficult for income property owners to recoup their investment when purchasing new construction because tenants will simply pay more for granite countertops than for laminates.

But these days, it’s harder for home builders to get off the ground. This means it will be a good time for income earners to find new homes.

Sales of new buildings are falling

Newly built home sales fell 8% in June compared to May, according to U.S. Census data. Meanwhile, new construction inventories rose to 9.3 months of supply, up from 5.6 months of supply at the end of 2021. 

Whenever there is a large supply of a particular commodity and a small demand, the price of that commodity tends to fall. 

This has not yet happened in the area of new construction – but it may in the short term. And this can provide income property investors with a prime opportunity to purchase new construction homes at a more reasonable price.

The boom in new construction ownership for everyday buyers and real estate investors need not worry about difficult repairs. 

Newly built homes can also be more manageable and less expensive to maintain. So when new homes under construction are available at the right price, investors should consider jumping in.

Meanwhile, homebuilders are increasing incentives to attract buyers. Investors moving into new construction soon may be in a position to pick up premium lots or upgrade upgrades (think higher floors, countertops, and appliances) for less money. or at no additional cost.

All in all, new home construction can be a solid investment despite its high prices. Those looking to buy a new build may soon start looking at local opportunities – especially as builders become increasingly desperate to sign contracts.