Investors are Building New Buildings Rather than Buying Existing Structures. Attention Real Estate Investors: To learn about utilizing a commercial hard money bridge loan to Avoid Commercial Foreclosure and get right information to stop a commercial foreclosure.
We have recently observed a new wrinkle in the search for profitable investments for real estate investors.
One investor is building new homes for the rental market. Their decision was to have an attractive product that would please customers and stay rented. They are building them closer to city centers and avoiding the constant repairs and refurbishment necessary in older homes
One of the main motivators for this group is the remodeling needed to make older homes attractive to either buyers or renters. The repairs were an ongoing expense that far outpaced estimates. An incorrect estimate is always worthless but in their case it was vastly lower than reality.
The repairs and remodeling costs, even for basic and modest repairs, were much higher than anticipated. Wiring, plumbing and other repairs have to be done by licensed trades to pass rental inspections. The hourly rate was a shock. These trades also expect to be paid promptly, especially if you need them to come back for the next repair.
The investors made a pragmatic decision to avoid or limit some of these frustrations intrinsic in older homes. Older homes tend to have unfashionable floor plans, worn baths and kitchens and other condition problems that could be very expensive to repair or change. These problems also make them more difficult to rent.
Their solution was to start building new homes. With rentals that are in pristine condition they were able to find more customers and avoid a lot of the expenses they were incurring with older, refurbished homes. Due to their deep pockets, these investors don’t need typical short term financing such as commercial bridge loans aka, Commercial Hard Money Mortgage Loan To Avoid Foreclosure.
The downside is, of course, that the homes are only new and new looking for a limited period of time. Still most companies stock up on cream colored paint and paint between renters to make their units more attractive and rentable. It’s a regular cost for this type of business.
But costs of upkeep extend beyond paint, the cheapest of options. Rentals always get damaged, no matter what investors do to prevent it. Renters keep pets, take or manufacture drugs and throw darts at walls or punch holes in them. They paint when you don’t want them to paint or the kids color on the walls. Then you have renters who keep boa constrictors or blow up toilets with firecrackers.
All pointing to the sad fact that rental damage deposits may not cover everything you hope they will.
But still there is enough money to be made in the rental market to attract investors. The trick for investors is to attract the kind of good, long term renters who won’t damage the property. But damage still happens. Even the best renters can have a kitchen fire or drop red wine on the bedroom floor.
Still, newer rental properties with all the desired décor can attract more renters, especially if the properties are in a great location. They also need to have an open floor plan, comfortable master bedroom and bath, attractive kitchen and storage to up the attraction factor. Some locations also have amenities like pools and tennis courts, party rooms, exercise rooms, and covered parking.
Some of these communities have housing clustered around the amenities and work locations close by, enhancing the attraction of the rentals.
The clients can range from young professionals, families or down-sizing seniors. Pick your market and check out their wants and needs. Your target market may depend on what kind of land you can acquire. A large development could create a viable neighborhood with the right ingredients. Isn’t it true that Donald Trump once bought an old railroad yard in NYC? Unperceived value in property could really pay off for an investor.