More people are looking to buy new construction homes to turn them into rental properties. There has been a growing trend in the last five years of newly constructed properties, as real estate investors have identified the problems associated with older houses.
Not only do they cost a lot of money to maintain, but they also involve substantial tenant issues. Finding the right tenants has become more difficult. But many investors are just now beginning to realize how valuable newly constructed homes can be to earn substantial income from rent, along with several other benefits.
New Construction Homes Bring in Better Tenants
We have recently seen a change in everything a newly constructed house offers. Builders with a focus on residential homes are modernizing the structure and features. These newly built homes have exquisite detail and impeccable architecture that make them much more desirable than the old houses built 20-30 years ago.
Everyone wants to live in a modern house in a nice neighbourhood. The location, aesthetic, facilities, and amenities that these homes are equipped with are desired by most. It is safe to assume that this significantly raises the value of such properties. Their exterior and interiors stand out when compared with older properties in the same area. Therefore, these newly constructed homes attract tenants who want to live in a beautiful home and have the resources to afford it.
Good tenants are very mindful of their homes. They care deeply about the place they live in and don’t view any property as just a temporary place for living. Rather, they see it as their own home. This is very important as it makes them want to be more careful about damaging the property.
Moreover, people who care the most about their living place are those who enjoy more beautiful neighbourhoods and houses. Psychologically, tenants tend to place a higher value on new properties. They are also usually looking to move for a longer period, which is the best-case scenario for a residential property investor. They don’t have to worry about finding new tenants every few months.
Another major advantage of new construction homes is that they are equipped with brand-new features. They have features like extra storage space, modern kitchens, walk-in closets, smart gadgets, and beautiful lawns. With new features, more people will be attracted to the rental property. It can also cut back on advertising costs as the newly established properties advertise themselves.
Lower Maintenance Costs
The biggest challenge for managing rental properties is the maintenance cost. New houses are being built to higher standards. They have solid structures and state-of-the-art drainage, electrical, and plumbing systems. Moreover, these houses usually come with a new home warranty. In some cases, owners can extend their warranties for many more years by spending some extra premium. Therefore, owners do not have to worry about maintenance costs for several years. New construction homes provide a substantial reduction in maintenance costs, which makes income from these properties more profitable.
Some Other Benefits
Apart from attracting better tenants, new properties can be very profitable for real estate investors. It diversifies their portfolio by adding new locations to the mix. It also helps them generate positive cash flows by low maintenance costs on a new property.
Renting out your new home to tenants also makes management much easier. These tenants have a secure source of income, and they are unlikely to defer on their rent payments according to their agreements. They also try to meet all the requirements and guidelines as per the rental agreement, to keep living in a new property – no one likes the hassle of moving heaving furniture and belongings to a new place often. Therefore, owners do not have to stress about their property being misused or damaged. They also don’t have to worry about their tenants not getting along with each other. They may actually look forward to their management responsibilities and be greeted with a friendly face instead of more problems.
