Can New Construction get you a better Cash Flow Right Now?

[Robert Rahner]

🔥 Sub-5% interest rates aren't dead—you just have to know where to look. 

Something we must not overlook in the Current Market!! Right now New Construction is averaging less expensive than Resale. Typically new construction has always been more expensive that Resale Properties! This creates an amazing opportunity for Investors. Builders are sitting on inventory and offering huge incentives to move their completed builds as well as great pricing! If we look at a 20% Down Payment and a current rate around 6.875% on a $400,000 property the monthly payment sits around $2600. A national builder might offer an incentive of a 4.99% 30-year fixed rate. That reduces the monthly payment to around $2200. Now Renting that SFR property conservatively for Fair Market Value at $2500/per month goes from losing money to Cash Flowing $300/month.  I have even seen a 3.875% 7 year ARM offering if planning a shorter hold period with an estimated $2000/monthly payment just adding to Cash Flow. 

 In today's market, getting financing this low without buying down massive points is a game-changer for net cash flow. Let's also realize  brand new construction has minimal to no maintenance expected in the short term, Typically a one year warranty is included. I like to Mix in zeroscaped landscaping as well. The latest forecasting expects mortgage rates to not go down and possibly go up another quarter percent. I see OPPORTUNITY here!! 

The Breakdown (Example)

• 
  Purchase Price: $399,995


• 
  Down Payment: $79,999 (20% down)


• 
  Locked Interest Rate: 4.99% (30-Year Fixed)


• 
  Total Carrying Overhead: $2,144/mo (Includes Principal, Interest, Property Tax, HOA, & Insurance)
  

Cash Flow Potential

• 
  Conservative ($2,550 rent): +$406 net cash flow/mo


• 
  Target ($2,750 rent): +$606 net cash flow/mo


• 
  Optimistic ($2,950 rent): +$806 net cash flow/mo

Why This Works

• Low debt service keeps fixed overhead down, protecting your margins against market swings.


• $0 Private Mortgage Insurance (PMI) thanks to the full 20% equity position.


• Built-in cash flow from Day 1.

Check in with your local Real Estate Experts on the best deals!!