Posted over 3 years ago

Old House vs. New House: Which is the Better Investment?

There’s been a growing trend lately of investors seeking out newer properties to include in their rental arsenal. While older homes were the popular choice for many years, especially among DIY-ers who enjoyed the rehab process, there seems to be a shift in more and more investors turning to homes less than 10 years old. Of course, this immediately brings up a very important question – from an investment standpoint, which is better? Old or new?

Advantages of a Newer Home

Opting for a newer home for investment purposes comes with a unique set of benefits. For starters, there will typically be less to worry about in the way of repairs. Depending on the age of the home, the major systems within in it, such as the HVAC and electrical, should still be in very good shape. Another pro is that newer homes will have a more updated look that will appeal to today’s renters. Things like open concept floor plans, granite counters, and other higher end finishes are the norm for many newly built homes. This translates into less work for you to bring the home to the standards that most renters expect, along with the potential for higher rental rates, as tenants will usually pay more for a newer home with nice finishes.

Advantages of an Older Home

While an older home may not have the granite countertops and stainless steel appliances that catch most people’s eye, they do have their own perks – and lots of them. One is that older homes are going to be located in established neighborhoods, with mature trees and ideally near local amenities, such as shops, restaurants, parks, and public transportation. Older properties can also be renovated to bring the home into the current decade, allowing the owner to select their own finishes and colors. However, even after switching to the standard beige color scheme (similar to what you’ll find in many newly built homes), an older property will likely still exhibit features that set it apart from the neighboring homes. In other words, there’s less cookie-cutter and more personality.

So Which is Best – Old or New?

And now we have arrived at the question of the day once again. As with many questions pertaining to property investment, there’s no easy yes or no answer. What’s best for one investor may not be for another, so it really depends on each person’s situation and goals. While you may save more money initially purchasing an older home, the amount you pour into it in repairs and renovations may be more than you bargained for. Conversely, you’ll spend more upfront in buying a new home, but there likely won’t be any reno costs to contend with. Another option is to buy an older property that’s already been rehabbed, which is what we offer at USREEB. With an older home that’s been fully updated, you get the best of both worlds – a like-new property without the brand new prices.
When it comes time to choose which property is right for you, don’t let it come down to just old vs. new. Weigh all your options carefully, and consider all the criteria involved before making your decision.

Comments (10)

  1. You would have to weigh in on the pros and cons of each of the two options. I personally prefer an old house as amenities would often be aplenty within the vicinity. A new house would also probably require a lot of new built-ins that could get expensive. You would have to work out your constraints in this matter to see which one better suit your needs.

  2. I meant, I am looking at building and rehabbing....

    1. Many properties can be rehabbed and fully turnkey in the matter of 2-3 weeks!

  3. I meant, I am looking at building and rehabbing....

  4. I agree with all of that, but I am looking at buying lots and building as opposed to buying an older home in an established neighborhood.  My thought is that by buying one that needs rehab, the time from purchase to rental move-in is less than building new.  I am open to all options, but I REFUSE to pay retail.

  5. I think You missed a couple important pros for old houses:

    1.) Greater margins. Most newer houses have less room for improvement, hence little ability to build in equity.

    2.) Less marketable. Many older homes dont sell quickly. This creates bargains.

    If an investor wants few hassles, new is the way to go. If an investor wants to work hard and earn more on each deal, look at old houses. You make money when you but, not when you sell!

  6. Great information:)

    1. Thank you, Karen!

    2. Thank you, Karen!