New Construction for a House Hack?

Question

I am a total newbie trying to do my 1st house hack with a duplex or triplex. I purchased C. Curelop’s book on the subject. Do you think it’s ok to do a house hack with new construction, if the numbers make sense? Also, would you take a chance giving a new real estate agent a shot or should I look for one with more experience?

Graciela Garcia · Answer

Look into the non-profit NACA (Neighborhood Assistance Corporation of America). If I could go back in time, I would use them and get myself into a 4 unit. Only thing is you must live in the property. No money down, no pmi, interest rate below market, and interest rate buydown almost to zero possible.

Ivette Bravo · Answer

Hi Lisa, I'm an agent in DFW that also invests and helps investors find properties. New construction definitely works if the numbers make sense (like everyone else is saying). Also, just commenting on some of the feedback, an experienced agent will most likely not work with you unless they get the buyer's rep signed, so you might have to end up working with a newbie! That being said, we always encourage newbies to get that buyers rep signed. No one likes to work for free and shouldn't. That being said a buyers representation agreement can be canceled at any time. It's just there to protect the agent IF you buy a property that they showed you - which is more than fair if they put the time and effort to find you the deal. Hope this helps!

Twana Rasoul · Answer

Nothing wrong with new construction if numbers work for you. Depends on the agent but an agent that also invests themselves is a plus.'Best of luck!

Steven Lowe · Answer

Sometimes new agents will give you a lot more hustle than one that has been around for a while or who has a lot of listings. You might be that new agent's only listing whereas the more experienced one might have a bunch of them and not give yours the attention it needs.

Kristopher Kyzar · Answer

@Lisa Walton my second investment property was a new construction that I bought in 2005. When I moved in, I moved my roommate with me. I bought it at market value with only 5% down (FHA). Less than a year later I was transferred, and started renting it out with a PM. During the housing market down turn, I lost a tenant and had to rent it at a lower rate. I was out of pocket about $200 per month for quite some time. I refinanced it in 2015, got rid of PMI in 2018. Today it cash flows nicely and I have about $90K in equity. Moral of the story is that I didn't by smart and got clobbered by a recession, but I was able to weather the storm. With the wealth of knowledge you can get from this site, and other investors on here, you should be able to make a much better buying decision than I did.On the agent topic, sometimes the new agents are the hungry ones. They can potentially be the rock star you're looking for.

Account Closed · Answer

If the numbers make sense, then definitely consider that! A new real estate agent could be a good choice, but it depends. I've had a couple bad experiences with newer agents. In my experience, the best agents are those recommended via word-of-mouth by other people I trust who are also in real estate, especially if the agent is newer.

Suzanne Player · Answer

Lisa, this might actually work out better. With new construction, you (theoretically) will have little to no repairs. No guarantees in life, of course - construction might have defects. Definitely find out if the builder offers a warranty or your state gives a warranty by law (you'll need to speak with a local attorney if you need advice on this). Not having repairs to worry about would make your budget more predictable and make it easier to manage the property, which is a good way to get your feet wet as a new investor.Good luck!

Brady Watkins · Answer

New construction can work great. I purchased my second property that was a single family new construction with the plan to live in it for a year then rent out. I am about to rent it out and based on rent in my area I should be netting about $300 a month. New construction can work with the right loan!

Dustin Allen · Answer

@Lisa Walton If the numbers make sense then by all means go for it. As for the new agent, I would definitely be open to it. The right new agent can be highly motivated and very ambitious. I agree with @David Niles on not signing any exclusive buyers agreement unless it is exclusive to the one offer only. Is this new development or are you considering having something built yourself?

David Niles · Answer

If your comfortable with the "new" agent, why not? You might be surprised how hungry they may be. I wouldnt sign any exclusive contracts with them though so if it doesnt work out you just lose a little time.