New construction vs. Rehab

[Elle Hall]

I live in a city where rehab properties go very quickly, cash deals for the most part, with the exception of the extremely dilapidated properties which are  located in the lower income areas of the city ( few businesses, some crime).  Im in a position to purchase a small tract of land where I can build a duplex up to a quad.  My question is would it be better to pay a little more for a new construction property or do I wait for a hot property to become available, place an offer which may not be that far off from the asking price.

thanks!

Elle

[Steven J.]

Financing is lower than it will be in the future so if the numbers make sense it may be wise to build. A few years ago, when financing was low for construction, there were huge apartment complexes going up in Ithaca, NY but were bound to sit vacant for awhile. It didn't matter to the builders because it was the cheapest rates they could get at the time and was worth it to have a locked in rate for x amount of years versus waiting until the rates went up. 

Are you planning to pay cash on a hot property and buy as-is? If not, some other investor will probably come in and do it even if they are a bit lower in price. 

Keep in mind, I have zero new construction experience. In my market, it seems to be a bubble that I wouldn't want myself entering right now because its at the top, in my opinion.