{"id":184944,"date":"2025-09-29T12:41:48","date_gmt":"2025-09-29T18:41:48","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=184944"},"modified":"2025-11-20T12:45:50","modified_gmt":"2025-11-20T19:45:50","slug":"why-new-construction-might-be-the-best-play-in-real-estate-right-now","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/why-new-construction-might-be-the-best-play-in-real-estate-right-now","title":{"rendered":"Why New Construction Might Be the Smartest Play in Real Estate Right Now"},"content":{"rendered":"\n

This article is presented by Lennar<\/a>.<\/em><\/p>\n\n\n\n

Most of us <\/span>were taught<\/span> that the best real estate deals are the ugly ones: the fixer-upper with peeling paint, a sagging roof, and shag carpet that should\u2019ve <\/span>been ripped out<\/span> 30 years ago. You buy it cheap, you pour in sweat equity or contractor bids, and you force <\/span>appreciation<\/span><\/a>. <\/span><\/p>\n\n\n\n

That model worked for a long time. <\/span>It still can, but the numbers <\/span>just<\/span> don\u2019t pencil like they did 20, 15, 10, and even five years ago.<\/span><\/p>\n\n\n\n

But here\u2019s the thing: The market has shifted.<\/span><\/p>\n\n\n\n

Renovation costs are skyrocketing, <\/span>good contractors are scarce<\/span><\/a>, and the \u201cdistressed property discount\u201d isn\u2019t what it used to be. I\u2019ve watched more than a few investors chase those old-school deals\u2014only to see their returns evaporate with every surprise repair.<\/span><\/p>\n\n\n\n

Meanwhile, a quiet shift has been taking place. Investors have started realizing that the homes renters actually want aren\u2019t the beat-up houses on the MLS. <\/span>They\u2019re professionally built<\/span>, rental-ready homes that rent quickly, command premium prices, and remain fully occupied.<\/span><\/p>\n\n\n\n

The Hidden Costs of Old Homes<\/span><\/h2>\n\n\n\n

Let\u2019s be honest: Older homes look great on a spreadsheet. The purchase price is lower, and the rent might not be significantly different from that of a new house down the street. On paper, the <\/span>cash-on-cash return<\/span><\/a> looks solid.<\/span><\/p>\n\n\n\n

But fast-forward two or three years, and reality sets in: The HVAC unit dies, the roof needs replacing, and that minor plumbing \u201cissue\u201d turns into a $10,000 fix. Your CapEx budget, which starts as a line item in Excel, becomes an actual drain on your checking account. Suddenly, that \u201c8% return\u201d you bragged about at the BiggerPockets meetup has slid closer to 2%.<\/span><\/p>\n\n\n\n

It\u2019s not just the money, either. Tenants notice when a home feels dated, the appliances are mismatched, or the A\/C can\u2019t keep up in the summer. And when tenants leave, vacancies and turnovers <\/span>eat away at<\/span> profits. <\/span>At a certain point, you realize you\u2019re running <\/span>just<\/span> to stay in place.<\/span><\/p>\n\n\n\n

Why New Construction Works for Investors<\/span><\/h2>\n\n\n\n

That\u2019s why new construction has started to look so appealing. When you buy a new home, you\u2019re not inheriting decades of wear and tear. You\u2019re starting fresh.<\/span><\/p>\n\n\n\n

The first advantage is predictability. Most builders include warranties on major systems, structure, and appliances. For the first five years, your most significant expense might be landscaping and cleaning. That steadiness ensures reliable <\/span>cash flow<\/span><\/a>, a quality that old homes rarely possess.<\/span><\/p>\n\n\n\n

Then there\u2019s the tenant side. Renters want modern layouts, open kitchens, energy-efficient systems, and even smart home features. A recent Rently survey found that <\/span>65% of renters<\/span><\/a> are willing to pay more each month for smart home features, such as smart locks and security cameras. <\/span><\/p>\n\n\n\n

This<\/span> is just one of many data points showing that modern, tech-enabled homes command a premium. Higher gross rents plus less turnover? That\u2019s a winning combo.<\/span><\/p>\n\n\n\n

Running the Numbers<\/span><\/h2>\n\n\n\n

Imagine two scenarios.<\/span><\/p>\n\n\n\n

Investor A buys a $250,000 home built in the 1980s. The rent is $1,800 a month. After taxes, insurance, and maintenance, they net about $1,100 before debt service. Not bad.<\/span><\/p>\n\n\n\n

But<\/span> in year two, the roof fails, <\/span>costing<\/span> $20,000.<\/span> In year four, the HVAC <\/span>dies<\/span>, another $5,000.<\/span> Over five years, that \u201cgreat deal\u201d doesn\u2019t look so great.<\/span><\/p>\n\n\n\n

Investor B buys a brand-new, $300,000 home. The rent is $2,000 a month. Taxes and insurance are slightly higher, but maintenance is nearly nonexistent. Their net is closer to $1,400 before debt service. <\/span><\/p>\n\n\n\n

Over the past five years, there have been no <\/span>surprise CapEx hits<\/span>. The return stays steady, and tenants are happy to renew.<\/span><\/p>\n\n\n\n

Even though Investor B paid more upfront, they came out ahead because their cash flow wasn\u2019t eaten alive by repairs and turnover.<\/span><\/p>\n\n\n\n

Why Now Is the Moment<\/span><\/h2>\n\n\n\n

This<\/span> isn\u2019t just theory. <\/span>The<\/span> U.S. was approximately 4.7 million housing units short <\/span>as of 2023<\/span>, according to <\/span>Zillow<\/span><\/a>.<\/span> Demand for rentals is <\/span>through the roof<\/span>, and tenants are competing for quality housing. Builders like Lennar are responding by delivering investor-ready homes designed for today\u2019s renters.<\/span><\/p>\n\n\n\n

We\u2019re also in a unique environment where builders are motivated to work with investors. <\/span>Mortgage rates have cooled <\/span>a bit<\/span>, resale inventory <\/span>is still<\/span> tight, and builders <\/span>want<\/span> to move their pipeline.<\/span> That opens the door for opportunities that didn\u2019t exist a few years ago.<\/span><\/p>\n\n\n\n

And let\u2019s not forget demographics. <\/span>Millennials and Gen Z now <\/span>make up<\/span> the <\/span>bulk<\/span> of the rental market, and their preferences lean heavily toward modern amenities and energy efficiency.<\/span> It\u2019s no wonder demand for new construction continues to climb.<\/span><\/p>\n\n\n\n

Enter the Solution<\/span><\/h2>\n\n\n\n

Here\u2019s where Lennar has made things simple. <\/span>Lennar\u2019s Investor Marketplace<\/span><\/a> delivers curated, turnkey new homes across 90+ markets, complete with trusted rental comps, built-in warranties, and end-to-end support, with financing, title, and insurance.\u00a0<\/span><\/p>\n\n\n\n

Whether you\u2019re buying one property or building a nationwide portfolio, the process is streamlined and designed for investors. Think of it as the difference between piecing together random deals on the MLS versus using a marketplace built for scale.<\/span><\/p>\n\n\n\n

Let\u2019s say you\u2019re a busy professional who wants to invest in rentals, but doesn\u2019t have time to manage renovations. With Lennar\u2019s Investor Marketplace, you could pick up two new homes in a fast-growing market like Dallas. Rent them out, enjoy predictable performance, and grow your portfolio without the headaches.<\/span><\/p>\n\n\n\n

Compare that to chasing older homes, fighting with contractors, and juggling higher turnover rates. One path feels like a full-time job. The other feels like investing.<\/span><\/p>\n\n\n\n

Final Thoughts<\/span><\/h2>\n\n\n\n

Old homes will always have a place in real estate investing. Some investors enjoy the challenge of rehabbing and the potential upside that comes with it. But if your goals are steady returns, predictable performance, and scalable growth, new construction is worth a closer look.<\/span><\/p>\n\n\n\n

With <\/span>Lennar\u2019s Investor Marketplace<\/span><\/a>, you can access investor-ready homes nationwide, backed by warranties, data-driven insights, and end-to-end support. It\u2019s never been easier to build a portfolio with confidence.<\/span><\/p>\n\n\n\n

Disclaimer: <\/span><\/strong><\/p>\n\n\n\n

Statements made are based on currently available information, current market conditions <\/span>and<\/span> should never be relied upon. Market rates <\/span>are based<\/span> on market trends and other factors that can cause predictive statements to differ materiall<\/span>y. <\/span>This statement <\/span>is no<\/span> guarantee <\/span>of<\/span> the present or future market conditions <\/span>and<\/span> market values.<\/span> Lennar makes no guarantee of present or future market conditions. Forecasts, projections <\/span>and<\/span> other predictive statements should never be relied upon. <\/span>You should consult your own accounting, legal <\/span>and<\/span> tax advisors to evaluate the risks, consequences <\/span>and<\/span> suitability of any real estate transaction.<\/span> All product and\/or company names are trademarks TM or registered trademarks \u00ae of their respective owners, and use of these marks does not imply any sponsorship, endorsement, support, or affiliation between the trademark owners and Lennar. <\/span>This<\/span> is not an offer in states where prior registration is required. Void where prohibited by law. Copyright \u00a9 2025 Lennar Corporation. Lennar and the Lennar logo are U.S. registered service marks or service marks of Lennar Corporation and\/or its subsidiaries<\/span>. Date<\/span> 09\/25.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

This article is presented by Lennar. Most of us were taught that the best real estate deals are the ugly ones: the fixer-upper with peeling paint, a sagging roof, and […]<\/p>\n","protected":false},"author":613755,"featured_media":184968,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4433],"tags":[],"class_list":["post-184944","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/184944","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613755"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=184944"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/184944\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/184968"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=184944"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=184944"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=184944"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}