What is the Pros and Cons to buy a new constructed house?

5 Replies

I am looking to invest in a Single Family House or Multifamiy in Seattle area, and see some new constructed houses which looks amazing from all the pics. I am wondering what the tenant usually think about new house? Are they willing to pay for the premium? How should I choose between an 20-30 years old house and a brand new constructed house?

So what is the pros and cons from an investor perspective? 

Pros: easier to find tenant? less hassle to maintain everything? 

Cons: less NOI? too new houses in new area which is inconvenience?

P.S. In Asia or Chinese culture, people do care a lot to live in a new house rather than a SECOND HAND house; in other words, the 2nd hand will depreciate a lot like a car once people lived in for awhile.

Why not take an older house and rehab it with some newer finishes to make it feel new?  Would this be a more economical way to invest in your business?

You're never going to appease everyone. Pick a market you want to sell to and focus on that. That could be as simple as picking what sells the fastest. You could also be more specific and target your Asian and Chinese cultures. These types of narrow targeting could net you more but you also are taking higher risks because of narrowing your market. 

The first is doing your HGTV house (so to say) so your choices are based on popularity and appeasing a broad array of people. The second is make specific and methodical choices based on a targeted group of buyers, which does usually come at a premium. This is easier to achieve if you are flipping a house and renting vs buying new and renting. But you can achieve both.

Personally I don't find buying new being worth it. Just because of the cost of mortgage that comes with it vs a rehab. But there's no work needed in new construction and some people like that. There was a podcast about a guy in Florida that does small spec home builds to own and rent. So it definitely possibly. There are lots of options but I think you first need to figure out who you are going to target with your rentals as that will really dictated what you should do.

Originally posted by @Ken Kwok :

I am looking to invest in a Single Family House or Multifamiy in Seattle area, and see some new constructed houses which looks amazing from all the pics. I am wondering what the tenant usually think about new house? Are they willing to pay for the premium? How should I choose between an 20-30 years old house and a brand new constructed house?

So what is the pros and cons from an investor perspective? 

Pros: easier to find tenant? less hassle to maintain everything? 

Cons: less NOI? too new houses in new area which is inconvenience?

P.S. In Asia or Chinese culture, people do care a lot to live in a new house rather than a SECOND HAND house; in other words, the 2nd hand will depreciate a lot like a car once people lived in for awhile.

I build new construction in Portland  and for SFRs you would need about 50% down to cash flow.. which is OK. Seattle I bet the same

you can buy brand new construction 4 plexs in Portland for 1.2 to 2 million that will be about 4 to 5 Caps with 25% down and they are built as condo's as well so you can rent them all or sell them individually.. I fund a builder who does this..  

Originally posted by @Steve B. :

Cara Lonsdale you’re probably right academically but as the OP mentioned, Asians prefer completely new, modern construction. This has also been my casual observation.

and concrete !!!  wood rots