New Construction — Is This the Next Big Scaling Play?

Question

Fellow lenders/investors, There’s been a lot of momentum toward new construction loans lately, especially in markets where inventory is tight.

For those scaling their portfolios, does building from scratch feel like a smarter move compared to chasing overpriced resales?

Curious what others are seeing — are your clients leaning more toward construction in their scaling strategies?

Jay Hinrichs · Answer

some markets one can pull it off for rental purposes most markets makes zero sense.

James McGovern · Answer

New builds are severely overpriced as well

Stuart Udis · Answer

Depends on how you define scaling. Unit count or revenue? Revenue yes, because the correct SFH product in the correct location is performing well. Just follow what the big boys like Toll Brothers are doing. Higher end housing, predominantly geared towards down sizers but the product and location are key to their success. Building starter homes, not so much right now. If you are looking to build multi-family, its challenging. Costs in many locations don't pencil and you need equity that will be patient because significant rate cuts are necessary to recycle out equity on new construction multi-family deals at this time. Sale exits are challenging too.

New Construction — Is This the Next Big Scaling Play?

New Construction — Is This the Next Big Scaling Play?

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