It Might Be Time to Switch Your Niche to New Construction

Every day on BiggerPockets we read of the strategies of those that fix/flip properties, or buy/hold. These investors are usually looking for older houses that for one reason or another are being offered at below market prices to buyers. However; as the market improves, there are fewer and fewer of those opportunities. You can get out of the market, or change your niche.

Why not get in on a new niche?

Rather than buying a “used” property that may be outdated and old, and may have issues you cannot see, BUY NEW!

Reasons to buy new construction

You will be the first owner (you’re paying for the house, not all the previous profits of prior owners, brokers, remodelers, etc. over a period of years.)
Everything in the house is new, and under warranty
Lower costs of owning (less maintenance, lower insurance costs, energy efficient, etc.)
Higher rents and demand
Longer building lifespan
Pride of ownership

Ways you can get in on new construction:

Purchase a new home as a buy/hold investment, or as an owner/user
Purchase land and Develop/build homes or commercial project yourself
Partner with a Developer to develop land ( You can provide development loan or act as a Joint Venture Partner)
Partner with a Developer/Builder on the construction of a new home or commercial project (Participate as a Construction lender or Joint Venture Partner)

If you aren’t familiar with new construction and the process, you will need to do your homework, and make sure you consult with an attorney, and/or your accountant to discuss the details. Be sure all financing is done according to the laws of your state, and through a mortgage broker that is experienced in dealing with construction lending. Make sure there are protections that limit the amount of money given out at any given time, and require regular construction updates. (with all the new technology, it’s easy for you to literally watch the progress of a building as it’s being built). Make sure the contractor is experienced, licensed, bonded and insured.

Photo: compujeramey

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.