Benefits of New Builds as Rentals in Uncertain Times

In the ever-evolving landscape of real estate, there's a rising star that investors should seriously consider: new builds. As someone who isn't employed by any builder and works almost exclusively with investors nationwide looking to invest in San Antonio, I'm always on the hunt for the best deals. And, to be frank, new builds are currently outshining most wholesale deals or MLS findings. Here's why:

PROS:

1. Desperate Times for Builders: As a Realtor, our relationship with new builders is a love/hate one. In prosperous times, they often sideline us, offering minimal commissions. Now, they're rolling out incentives, offering commissions as high as 6%, and their overall approach has become more collaborative.

2. Incentives Galore: Builders are collaborating with banks and lenders to craft the most attractive financing packages. They're buying down rates substantially. And the good news? These incentives aren't just for owner-occupied homes but are increasingly available for investor purchases too.

3. Low Maintenance: A brand-new property means minimal repairs and maintenance in the early years.

4. Warranty: Most new builds come with a comprehensive warranty - one year for almost everything, five years for appliances, and up to a decade for the foundation.

5. Modern Design: New builds are at the forefront of architectural and interior design trends, appealing to clients seeking a contemporary feel.

6.Energy Efficiency: With advanced energy-saving features, these homes can significantly reduce utility bills. This is especially beneficial in areas where landlords typically cover utilities. This can lead to substantial savings, especially in regions like the sun belt with extreme temperatures.

7. Growth Potential: New communities tend to appreciate as more amenities are introduced. Plus, builders have already done the demographic and trend research for you.

8. The Numbers Add Up: Unlike before, new builds now offer positive cash flow. A recent analysis of 25 properties in San Antonio showed promising cash on cash returns and purchase cap rates below 7%.

9. Bulk Deals: Some builders are offering deals on multiple home purchases, simplifying the investment process for those looking to invest a significant sum.

CONS:

1. Long-Term Commitment: It's essential to understand the builder's timeline for the neighborhood. Selling a house amidst ongoing construction can be challenging.

2. Quality Concerns: The rapid pace of construction might compromise quality. Always get an inspection, even for new builds.

3. Lack of Creativity: For investors who enjoy the creative process of renovating, new builds might feel a bit sterile.

4. Market Saturation: With many new builds popping up, there's a risk of market saturation, which could affect property values and rental rates.

In conclusion, while there are undeniable benefits to investing in new builds, it's crucial to approach with a discerning eye and conduct thorough due diligence. But for those willing to navigate the landscape, the rewards can be substantial.

*Note: I am not affiliated with any builder. My primary focus is to find the best investment opportunities for my clients. And right now, new builds are shining bright on the horizon.*