Thoughts on New Construction in 2026?

[Shaun Anderson]

Anyone looking at investing in New construction around OKC/Edmond? Looks like builder incentives may be good enough to offset the new build cost with enough down, but might be more speculative than profitable. What appeals to me is knowing exactly what has been done to the house and having a long capex/maintenance runway. Thoughts?

[Chris Clothier]

Quote from @Shaun Anderson:

Anyone looking at investing in New construction around OKC/Edmond? Looks like builder incentives may be good enough to offset the new build cost with enough down, but might be more speculative than profitable. What appeals to me is knowing exactly what has been done to the house and having a long runway for capex and maintenance. Thoughts?

This is a very subtle detail that makes a big difference, and it really informs my answer.  Most will be speculative, but that is not necessarily a bad thing.  However, I have seen firsthand that buying properties in built-to-rent neighborhoods is a very bad idea for individual investors.  On the flip side, buying a newly built property as an infill in a neighborhood or in a neighborhood primarily marketed as owner-occupied, and then renting it, can have upside.

The difference really comes down to scale and control.  If you buy a rental property in a neighborhood built primarily for renters, you will be beholden to the largest property owner in the area and, to a lesser but still important extent, to the other landlords.  Once the largest rental owner in the neighborhood starts lowering rents to boost occupancy, you have no choice but to follow suit.  A large owner, such as an institution, can afford to drop rents, sometimes by several hundred dollars, if their motivation is occupancy.  

When you own a newly built property in an infill location, it is no different than any other rental.  If the area is primarily owner-occupants, you have more control over your rent.  If you buy a property at the tail end of a neighborhood build-out, and a builder has sold a majority of the properties to owner-occupants, again, you have some control over your rents because there is no large-scale owner.

As part of your due diligence, you need to search public records of the address you are going to buy and research the owners of homes in the neighborhood.  You want to pay attention to how many homes are owned by entities and how many are owned by any one particular entity.  If the economics don't work or if you risk getting whipsawed by one owner with scale, no amount of enticement can make a bad investment perform good.