Is it generally a bad idea to buy and hold new construction as a rental? I'm wondering since there's really no way to add value to the property. The benefit would be no cap ex or maintenance for a few years and it might be easier to rent (as long as everyone else in the neighborhood plans to buy and rent too). I'm considering a townhouse in Broadway Centre in Brandon. The area is just outside of Tampa and pretty well built up, I cant see where else a large home builder could build near buy. The cap rate would be lower, around 7% but I'm wonder if there is a better potential for appreciation. The HOA fees are only $150, and its a nice community with a pool. I'm an out of state investor and would retain a manager.
Is this kind of investment a low maintenance opportunity for appreciation while collecting some rent or a value trap?
Will it cash flow? IMHO, that's the main criteria.
A purchase of about $150k will end up netting a bit under $300/m with 25% down. But the same 25% down could be invested in an older property in an area that might not be growing as quickly and yield $600+ each month but might but appreciate much.
@Adam Anderson who will be property management? If you are looking to attempt this yourself from out of state I would say go with new construction. I don't hate the new construction deal, but I personally don't love town houses.
thanks for the feedback, I feel the same way but was attracted to the appreciation potential, I re ran it and getting more than $100/m will be a stretch, think it's a nogo.
Sounds like you´ve recrunched the numbers. You pay a premium for new construction and this affects monthly cashflow a lot. You wouldn´t find too many investors paying retail and keeping this type of property in their portfolios.
The truth is that there are other parts of Tampa (Pasco County for example) where you can buy concrete build single families in the $50k-60k ranges. Some of them might need new roofs, a/c systems and upgraded kitchens, but there are people out there that can do that for you and still provide a turnkey rental that will cashflow much higher than new build.
Keep looking buddy - the more deals you analyse the better.
for new construction, we are just buying vacant lots and building new construction. some will be in areas that support Section 8, so they are good for investors for all the reasons you mention above. Plus the government pays the rent check.