How will the new construction next to my house affect my property value?

Question

Hi guys-
I'm closing on my first 2-family investment this week. As someone who did put in quite a lot in over-ask (the property was selling for $580k and I got it at $620k), I'm wondering how a new construction will affect my property value? There's a new multifamily right on the side of my house and then there's 2 vacant plots of land right across the street that looks like they'll be building new soon. My current 2-family investment is a turnkey investment so not much work was needed to renovate, except the basement I will be renovating since it's unfinished. Would love some experienced foresight here

Abel Curiel · Answer

Hello @Andrea Lopez and congratulations on your first property!

From the information here, it seems that multifamily demand in your area is high. In most metro areas, there isn't enough new supply hitting the market to match the demand.

There are other factors that'll determine if/how your property's value will be affected:

- The age of your property- The size and layout of the new construction properties in comparison to yours- Is the type of home being built the same as yours i.e. frame, stucco, brick- Rental comps for your style of property vs. the new construction- Current sales comps of new construction vs. existing multi-family homes- ZoningUnless a significant amount of new construction MFRs are added to your local market, I don't see this construction negatively affecting your property's value.All the best!

Abel