Thoughts on New builds for Investment properties?

Question

What is everyones thoughts on getting a new build right now for investment purposes? Rates are 5.25% for primary, Cash flow not there, but holding for 10+ years & betting on appreciation. I currently have one in the neighborhood, I would move to another on VA Loan, use my commission as down payment, and essentially be breaking even on rent/mortgage payments for the 2 properties if I moved out of the area. I am looking at about 10-15 year holds. Just looking for others thoughts!

*I know a lot of people dont like to bet on appreciation

** I know it i market dependant

*** I know it depends on my risk tolerance and if I can afford it if something happens

*I know a lot of people dont like to bet on appreciation

** I know it i market dependant

*** I know it depends on my risk tolerance and if I can afford it if something happens

Doug Smith · Answer

We have two arms of our business, the lender and the real estate investor. Both are booming right now with new builds for spec purposes. We struggled to find flips, so we started building. The builds have grown in size and now we have three builds going...one that will sell for $900K, another that will sell for over $3M, and another that will break ground soon that are townhomes. From a lending standpoint, we're seeing more savvy, experienced investors moving to do spec construction. We're finding our returns to be the best in these areas right now.

Daniel Netzer · Answer

I like the gamble because it's hard to imagine rates not dropping over the next few years, at which point we'll see 5 million qualified home buyers per point, driving up demand and prices while you're able to reduce your carrying cost.