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Is Investing In Building New Real Estate Worth It?

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There’s no doubt that real estate is often–but not always–a wise investment. Building new real estate comes with particular perks and drawbacks, which you need to know to decide if it’s right for you.

Why You Should Invest in New Real Estate

As long as you can afford a plot of land, you can start a new build on any lot that’s available. You can even place a building so that it sees the best morning light. Depending on existing real estate, you can build up a location exactly as you like it. You don’t get the same flexibility with existing buildings.

New buildings, especially homes, appeal to consumers because they’re new. Plus, you can design a new project to have an open floorplan and other amenities that older buildings lack. On the other hand, you can customize the building to fit your budget. And if you plan to rent out properties, you’ll find that new builds require less maintenance than older homes, saving you time and money. Not only is the project new and in pristine shape, but you can choose windows, insulation, and HVAC systems that are much more efficient than what you’ll find in existing buildings. Similarly, as you outfit new rentals with new appliances, repairs and replacements will be covered by warranties.

With new real estate, upfront deposits are lower, so you get to keep more money in your pocket until the closing date. To grow your investments, you need to build equity. With the right choices, you can increase the new property’s appreciation rate to do just this. Look for growing markets with high demand for rental properties if you plan to go this route.

When Real Estate Investments Aren’t Worth It

Like any investment, real estate comes with risks. There are many factors you cannot control, however. Delays are par for the course when working with contractors. 

While you choose the location and the building, you’ll typically have to build outside of city centers, which can be risky when new builds cost more out of pocket. New neighborhoods simply lack the charm of established ones.

Real estate isn’t a liquid investment, either. This is especially true with new builds, which take time to complete and can be slowed down by weather or supply shortages.  The selling process may also be longer than you’re comfortable with or can spare. Still, you can diversify your investments to ensure you’ve always got some liquidity.

Finally, you’ll need to gather a good team. The right lender, contractors, and property managers ensure that every aspect of your investments runs smoothly. This is especially important as you add more investments to your portfolio.

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