Real estate investors have much to consider when developing a strategy, including the question of new build vs reno. Choosing between renovating existing properties and buying new ones depends on what is right for the individual. You’ll find investors who swear by one type of property or the other, and both sides have their advantages.
How do you know which path is right for you? This post will cover a few points in the new build vs reno debate.
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Costs are an obvious point to consider. When comparing factors like square footage, location, and number of rooms, new build properties will cost more upfront. However, you must factor in renovation costs for the older property. Even with renovation costs, most existing properties will be more affordable.
Building a new home requires more work than renovating an existing one, but buying and renovating can also be complicated. The investor will need to arrange for contractors to do the necessary renovations. Renovating can be advantageous for investors with experience or connections in the construction industry. However, you can buy a new build from a contractor without worrying about the extra work.
Cutting upfront costs attracts many investors to existing homes. While you can save money upfront, the maintenance costs will be higher. Older buildings are likely to have more maintenance issues. Investors should thoroughly inspect older properties and account for higher long-term maintenance costs in their financial projections.
The potential to generate revenue is a crucial point when evaluating any property. Newer properties generally offer higher returns than properties with renovations. You can charge higher rent for a newer property, and new build properties tend to be more attractive to tenants willing to pay more.
Another question is when you can get tenants in the house. The sooner you can place tenants in the property, the sooner you can generate income. If the new build is already complete when you find it, you can start looking for tenants immediately. The timeline will obviously be longer if you build from the ground up.
Most renovations will take less time than building a home. However, your timeline for placing tenants will depend on the scale of the renovations. If it is primarily cosmetic, you might have the house ready in a few weeks.
Are you looking to invest in Miami real estate? Click here to contact Marion Ott. Marion is a local real estate professional who can help you find the right properties. Whether new builds or renovations, she can guide you through the Miami market.
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