OOS Investor - Raleigh NC New Construction

[Steven Nguyen]

Hello BP members,

I am an OOS investor based in CA.  I see new construction in Raleigh NC for a 3 or 4 Bed / 2 to 3 bath costs around 220k to 270k.

I had a few questions: 

1. Do new home builders sell to OOS investors ? I know some only sell to people who will use as their primary residence.

2. What is the expected rent to value ratio ? I'd be happy with a 0.75 RV ratio given new construction has lower CAPEX/maintenance.

Thanks for any insight.

[Jiri B.]

I'm not sure where you got the numbers from, but most new construction starts from 270k+ for base model with no upgrades, etc. But will likely be over 300k unless you go very far out from Raleigh.

And for that reason, 0.75 is not realistic. If you get 0.5 - 0.6 on new construction, you will be very lucky. Most renters don't care about new build, shiny kitchen, etc. Most long term renters will prefer value. You could get 0.75 on resale homes though.

As for the new construction sellers, they don't really care who the buyer is as long as they get to sell their inventory. But you will need to check the HOA covenants, many of them that I see have something like 80% of properties needs to be owner occupied. But that is usually not an issue in that case.

Nothing wrong to buy new build but it wont be as profitable as if you do small rehab in comparison. Everyone has their own reason..