The reality with buying single-family rental properties in Salem is that there are both pros and cons to choosing a newly built home. So, newer properties have advantages such as more customization, higher energy efficiency, and would not need a lot of effort to maintain in the first few years, however, all these things may result in you spending more up front. This situation is usually correct and not only because upgrades aren’t cheap, but because there is generally very little room to negotiate on price. No matter which property you decide to pick, it’s crucial to take the weight of all of the pros and cons carefully to guarantee that you’re getting a solid return on your investment.
For so many reasons, buying a new home to use as a rental property can be a good investment. From a cost standpoint, new construction gives investors the chance to acquire and instantly rent out a clean, beautiful rental home with a range of attractive upgrades. Since the upgrades are already part of the purchase price, there will be little if any out-of-pocket repair and improvement expenses to get the property ready for your first tenant.
If the new home is all prepped and ready to move in, rental income can start right away. Included in the price of a new home are also a variety of upgrades that can let investors customize the rental home to attract a particular renter demographic. For example, a new home that has been upgraded with smart technologies will likely draw in the likes of a Millennial renter than one that has not.
Tenant appeal is a big deal in any successful rental property, and new homes offer renters something older properties cannot: the chance to be the first and only tenant who has resided in the home. A new property also allows renters significant utility savings, due to the fact that more modern homes tend to have higher energy efficiency throughout. Renters who want to stay long-term may be especially drawn in by these features, and by the concept of appreciating a modern, low-maintenance, energy-efficient home for many years to come.
Despite the fact that these are all compelling reasons to invest in a new home for your next rental property, there is also an abundant number of downsides to think about. For example, it’s important to think of the fact that not all builders are equal and that some may utilize cheap materials or try to cut corners to save money.
Purchasing shoddy construction can lead to endless haggling with the builder to try and get things done correctly, as well as higher repair and maintenance costs if you can’t get them to do the work the right way. One more item on the con side of things is the often-limited number of options available. Even if customization is possible to a degree, it is usually a matter of choosing between a very limited set of wall colors, countertop styles, and so on, or risk driving the purchase price up even higher.
Lastly, if you are an investor who appreciates a good bargain, buying a new home may not be the perfect option for you. This is because the price of new construction is not decided all the time by the market or a previous owner, frequently leaving some room for negotiation.
When you’re buying from a builder, they may not be as open to negotiation because lowering the base prices on their homes alters the data on comparable properties in the neighborhood and encouraging future buyers to put some time and talk them down too. Of course, this situation may not be the same for everybody as it would be contingent on the circumstances, and it’s always a great plan to ask for any available discounts or other financial incentives.
It is important to evaluate all the pros and cons before deciding to buy a new home to use as a rental property in Salem. But then again, with so much to study, it can be tough to recognize whether a new property is the right investment for your market and demographics.
You need detailed market information, like the kind offered to all property owners working with Real Property Management Hometown. We perform market assessments for all potential rental properties, ensuring that owners who partner with us have the tools and information they need to make the best possible investment decisions. For more information, contact us online or give us a call at 501-701-4702.
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