New Homes as Rentals

11 Replies

Hello,

I am a first time investor interested to start my journey in Orlando. I live and work in Reno, NV.

I am considering buying a new construction to serve as a rental, something that will give me a good cash flow, so I will have savings to acquire in another property.

Any ideas on where to start looking for new homes? Or new constructions? I have only been to Orlando once.


Thank you so much!!!!

@Archie Drake I would research and run the numbers on your own, but generally new construction does not cash-flow. 

The cost to build new out ways the rental income generated every month. Texas and Florida are hot markets which amplifies this even more. 

@Archie Drake I work a lot in new construction sales. They are very tight right now and some builders won't sell to investors, others are doing 'highest and best', some are requiring you get pre-qualled with their lender in order to be put on list to purchase. 

They are all slowing things down waiting on material costs to go down (mostly lumber). Prices have gone up and their normal incentives like paying for buyers closing costs etc, have gone down or been eliminated. I usually like to put investors in new construction, especially when they get in early in a community because the builder will force the appreciation for you by raising prices every 4-5 units they sell. So you build equity before the community is built out. Plus if they pay your closing costs it helps to make it cash flow. You also 'shouldn't' have cap ex expenses as everything is new are warranted.

I would be happy to talk thru some things with you if you like, just reach out. Good luck!

Hi @Archie Drake ! We are a property management company here in Orlando and Central Florida. I will be happy to have a quick call with you and talk about different areas and communities. We are managing many new constructions and we contentiously take on new homes. We track the performance of the investments and I can send you actual numbers. This will help you decide if Central Florida is the right location for you to invest!

Hi, I can't speak for Florida. However I work in Northern Alabama and we just accepted 19 contracts for new construction builds last week, 12 of those were out of state investors. I can only speak for the products I know personally. These deals are attractive to investors for the following reasons :

Contracts to build 3-4 bedrooms are available under $300k

Rental Comps from $1600-$2200 / month

Warranties:

10 Year structural 

2 years electrical, plumbing and HVAC

5 year warranty on the hot water heater

Tight market with low inventory. Huntsville was the 4th most popular move to city in the country last year. Employers such as Facebook, Boeing, Toyota, NASA, Redstone Aresenal... are all hiring/ recruiting. This is a huge factor in our market. If buying in Orlando, make sure to know the areas top employers and check to see if they are hiring. 

If going the route of new construction I advise you pick an experienced builder who is building a community, not just one house randomly. Secondly, try to be one of the first builds in that new community. As the community moves into the next phase of construction, the comps surrounding the first property increase. A year from now when the construction on your build contract is complete and the house is move in ready the exact same house is signing for thousands of dollars more just a couple lots over, in the same community. You kind of get a jump start on equity investing. 

Our builder (Hyde-Homes) has already established communities in the area but I will say we are not the only ones. DR Horton, Adams Homes and Breland all are continuously building more right along side of us. This market is so strong I have no problem sharing our competition with you. 

I worked for 3 years in Boston as a rental agent and have seen way too many unique problems with older homes. Being a landlord, having to know the ins and outs of 5 different properties, all built and maintained in different ways... it's too much work. You can manage 10 brand new homes that are practically identical, which makes any repairs or changes easy. For example, if you wanted to replace the replace the carpet between tenants, you can buy the carpet in bulk at a discount because now all your properties match. Not sure of the paint color for a drywall repair, no need to repaint the whole room because we registered all the colors used with Sherwin Williams. Further more, all our builds come with keyless front entry with changeable door codes. Which means you can allow showings and maintenance from out of state. Just change the code between jobs and new tenants. 

Like I said you don't have to build Hyde-Homes, we are just one option of many. But I hope this help give a perspective on our investors. 
  

Hi @Archie Drake

If you're interested in investing in Orlando, having a local team in place can be one of the most important factors in making sure your rental property is profitable.

Having worked with Steve Rozenberg, Bigger Pockets contributor, professional real estate investor, and Head of Investment Education at Mynd Management, I've learned that not having a local team can be one of the biggest drains on investors' return on investment.

There are some great ways to source a local team. I'm happy to tell you more if you're interested.

Hi Archie! I actually have a friend who is a Realtor/Investor in Orlando! Her name is Tanin & she would be more than happy to help you find that new construction home. I'll be shooting you a dm.

New homes that cash flow in Orlando I would be interested to know how that works 


I do have a question why do you want to invest in Orlando and not Reno or closer to yourself?