New construction, 10 hours away

[Martin S.]

I fell in love with a particular state, which I drove by on my way to Florida from NYC. I was looking at some bank owned foreclosures, which were ok but not great, and then I decided to drive into a new constuction community and was blown away, at $200k I could have a brand new 3,000 sqft 3 bed with game room, great room, living room, dining room, .5 acres, community pool, basketball, tennis, soccer only $45 HOA. 30 minutes from the center of the major city in that state. Why would I pay $140k for a 1,400sqft 30+ year old home when I can have a house thats twice as big in a better neighborhood and get much better tenants and rent. Makes sense right?

I dont usually hear about real estate investors going after new constuction that much, usually they focus on foreclosures, short sales or wholesalers, from what I gather from reading everywhere. Wouldn't new constuction, especially in this situation be a much better deal, especially since I wont have any repair costs for at least 10 years (warranty)...?

[Jacob A.]

@Victor A.

I was born and raised in Raleigh and wouldn't want to be anywhere else personally. From an investing standpoint, I think it's about as solid as any other market in the country. I don't think you will have those big swings like some of the western markets, but it seems to stay pretty consistent here so you know what you are going to get. From what I've seen, it appears that the SFR renal market is a little bit dry. The homes just don't bring high enough rents to justify the purchase prices in most cases. Then again, it depends on how you want to finance them and how you want to look at them. Using the 2% rule, there are very few if any that meet those standards.

The rehab market seems to be on fire right now. Good deals rarely stay on the market longer than a week.