DFW New Construction SFR

[Greg Gallucci]

Has anyone had success with buying and renting new construction SFRs in the DFW area? Is inventory as high as you hear in the media and are builders offering financing at more competitive rates?

Thanks

[Bruce Lynn]

Quote from @Greg Gallucci:

For the most part I suggest not buying new builds to rent for a number of reasons.

#1. Resales are almost always better priced and better ROI.

#2.  Most builders don't sell to investors.

#3.  Most new neighborhoods have PIDs or MUDs and that reduces your returns at least 1% to 1.5% for the first 20 years.

#4.  Most are in HOAs that are designed to be investor unfriendly or downright prohibit rentals.  If they don't have it today, they can vote to implement it.  I know of at least 3 HOAs in Denton/Collin County who voted to do just that within the last year.  I think the resolutions didn't pass, but you know where the sentiment lies.  All kinds of restrictions around.  Some require you to live in the property a year before renting.  Some limit rentals to 1% of the homes, so if you are lucky to get in now and there's a waiting list, you might not be lucky to rent the next time if there is list.  You get to wait.  Can you have the house sit empty for a year.

#5.  Most of the newer "investor" type homes are crap.  Like no light fixtures.  All can LED lights.  Ask your wife or female friends if they like two LED lights in the master bath to illuminate their makeup mirror.

#6.  If you find the few exceptions to this you'll see a bunch of newby investors who don't know any better, buying in them.  That is not going to be a good situation in 5-10 years when there are so many rentals in one neighborhood.  It will be a disaster.  Poorly built houses that many investors have run into the ground.  Yards that haven't been watered or cared for since install.  Cars everywhere.  They will be trashy.

Absolutely NO reason to buy new construction.  The repair and warranty idea is a myth.