Buy Existing vs Build from Scratch — Which Are You Betting On?

Question

With inventory tight and rates mixed, some investors pick up existing deals, others go ground-up.

We’ve funded both ends: new builds and acquisitions.

Which side are you favoring this year and why?

G. Brian Davis · Answer

Hi @Tracy Thielman!! Most of my investing goes toward my co-investing club these days, with that being said, we've done a mix over the years. We’ve seen good opportunities in both existing value-add acquisitions and select new builds, depending on the market. Personally, I like acquisitions right now for quicker cash flow, but ground-up can still make sense where demand and rent growth are strong. It really comes down to balancing timelines, risk, and return goals.

James Papaia · Answer

I looked at both options last year and ended up buying existing. Holding costs, permits, and delays with new builds made it hard to pencil out unless I already owned land.

Henry Clark · Answer

OP ground up.  We do country subdivisions just the lots.  Our market  basis is tight supply thus a new build, also people wanting to move to the country side.  75 acres into 18 lots.  This is our second subdivision.  Would not do this if there was an oversupply of housing.

David Krulac · Answer

I bought 3 houses new from a builder this year with below market 30 year financing, and have been offered more.  After buying and selling more than 1,000 properties for my own inventory, my preference goes in this order: 1. buy existing property 2. buy new properties built by others, 3. build myself.