After listening bigger pockets for a while, I am ready to investing out of state now, primarily focus on Florida and Texas, I have 300k available to investing,and I can get about 280k heloc later, I like to purchase 3-4 new constructions , is it Build to Rent model is good ? Or anyone can recommend some good reputation companies?
Hi, @Qiang Chen I have a lot of new construction projects by me in Palm Beach County/Martin County Florida. Would be happy to discuss.
Hello @Qiang Chen ,
Yes, Build 2 Rent in Florida is an excellent model, especially for an out-of-state investor. Because there is high demand for resale properties, many of my investors have immediate equity at closing. Furthermore, with a new construction, you can anticipate having lower operating/repair costs and higher rents. I am sending you our full list of Build 2 Rent Inventory now. We currently have properties in Port Charlotte, Punta Gorda, Lehigh Acers, Cape Coral & Jacksonville, FL.
Please advise if I can provide further assistance!
@Qiang Chen - With new construction, you tend to pay a premium for the property compared to resale. As a result, your cash flow is usually lower. But the plus side to it is your maintenance and repair costs tend to be way lower and the property comes with some sort of builder warranty for major issues. However, if you're looking out 3-5 years, with appreciation and the rising cost of rent, you could be looking at a decent cash flow with a low cost to maintain property. As long as you are planning on holding for at least 10 years, I can see the upside.
In addition, with your level of funds, you have the ability to find commercial multifamily properties. You could add 8-10 units to your portfolio in one deal and I assure you, with those level of units, you will be cash flowing way more than new construction. Economies of scale work in your favor. If I were you, I think you might get more bang for your buck going this route.
P.S. The one thing about Florida that you need to be aware if is flood insurance. A lot of properties in Florida require it and it is costly so you need to build it into your numbers.
Thank you for mentioning the premium for the new construction, I didn't know that, and the flood insurance is my concern too, I am open to buy 8-10unit commercial property if it makes sense
It is hard for anyone to say whether or not it is a good investment. It could be...it also could not be.
The pro of a new construction is that ideally, there is less maintenance / upkeep in the early years. You likely also dont have to worry about HVAC, Roof, Water Heater, electric for atleast 10 years.
You hopefully have a good product and it will be easier to attract a quality tenant.
The Negatives is that you have to find a reputable builder.
There is currently a delay in building across the country with backed up demand and increased material / labor costs.
In addition, with the holding period, you have more exposed risk if the market tanks from the time of agreement to build to the time the project is complete.
Best of luck!