When you are looking to purchase another Denver investment property to add to your real estate portfolio, whether it’s your first or fiftieth, you have a choice to make– should you buy a new build or a resale?
Not all markets even offer the option, but in Denver, there are an estimated 33 builders building homes in 262 communities in the Denver Metro area. Meaning, there is no shortage of new builds to invest in.
Choosing between the two depends on several factors regarding your Denver investment property plans.
- Are you financially ready to invest in an additional property today or would it be better to lock-in a price and pay the full down payment later?
- Do you need to start earning rent as soon as possible, or could you wait a few months until the construction is completed?
Benefits to either option: purchasing a new build, or buying a resale
The benefits of choosing to build brand new are plenty and they’re exciting, too. New builds are on the rise in many suburbs and can be a great option when looking into a new rental property.
- You pay a smaller amount of money upfront and you only pay down payment when the home is finished being built.
- The home will likely increase in value from the day the builders break ground, meaning the day the home is done being built, you’ve already made money on your investment.
- You typically have the choice of fixtures and finishes so you can choose to save money and stick with standard options or you can select the areas you want to upgrade, such as hard floors to last longer than cheap carpet or even kitchen upgrades to enhance the value of the property.
- You will have more time to market the property to ensure a tenant is going to move in as soon as the home is finished being built and is move-in ready. Even as your home is being built from the ground up, you can use the stock photos from the builder of the elevation you chose, photos of the model unit, and photos of the floorplan to advertise your new build for rent.
- New properties are attractive to potential tenants and can earn higher rent per month due to the fact they are typically located in nicer and up-and-coming neighborhoods.
- You will likely spend less money on repairs and maintenance during the first few years because everything is new and in working condition. If anything does go wrong, it will likely be under warranty still.
The benefits of buying a resale are helpful and practical, and many people choose this route.
- Aside from waiting to close, it is a fairly quick process, and you won’t have to wait for the house to be built, allowing you to find a tenant and earn rent sooner.
- Homes in established neighborhoods can be attractive if that neighborhood has earned positive reputation over the years. Things such as parks, great schools and other amenities are common in older neighborhoods and can add value to the home, thus allowing you to collect more in rent.
- Resale homes are often already fitted with things like blinds, landscaping, etc. These things can add up, and already having them in place can save you money.
- There is often more room for pricing negotiations, as you would likely be working with a private homeowner and Realtors, rather than a builder who have quotas and sales goals and budge less on the base price.
In conclusion, buying a new home from a builder typically offers more flexibility and options but they can come at a price. Buying a resale can limit your options, but can save you money when it comes to things like landscaping the yard and window coverings. Whichever route you choose, just make sure that you hire a great property manager to manage your new investment. The property management team at Colorado Realty and Property Management, Inc. is always happy to advise you on your next rental property purchase. Call us today at 303‑665‑7368.