Tiffany Elder, MBA, Realtor
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NEW CONSTRUCTION CASHFLOW

For many investors, cash-flow rental properties are creating an avenue to replace primary incomes and accelerate early retirement timelines.

Landlording, however, comes with an added responsibility and expense called "repair and maintenance".  For investors who are concerned with the added expense of upfront maintenance and repair on their rental properties, new construction rentals can offer an outstanding solution.

Why Should I Invest in New Construction Rental Property? 

There are several reasons:

  • Appeal - Tenants love new construction which can translate into lower vacancies for YOU. At a time of increased competition for the best tenants, why not position yourself with the best product?  Put yourself in the tenant's position;  With all things being equal, would you, as a tenant, want to sign a lease on a new unit with new features, appliances and amenities, or an older unit in need of repair/upgrading? 
  • Peace Of Mind - Our new construction comes with a warranty on both the structural components of the property, and all included systems.  This minimizes the owner's risk of large out-of-pocket expenditures on repairs. 
  • Value - New construction is desirable to buyers.  Newer construction often sells at a higher pricepoint than older construction in the same area.  This equates to more money in your pocket when and if you sell!
  • No Surprises - You know exactly what you are getting with new construction.  There are no hidden or latent defects, because everything is new!

 About our new construction rental properties

  • We only build in the best locations.  In real estate, location is king.  We are investors, and we work almost exclusively with investors. We know what areas are desirable for tenant-occupied properties, and what areas to avoid. 
  • Generous floorplans appeal to the tenant market.  We work from a portfolio of  floorplans that are appealing to the tenant market.  For example, our townhome-style duplex has a 4-bedroom or 3-bedroom plus dining room option.  This model has a large galley kitchen with additional pantry and storage space, 2.5 baths, an over-sized master bedroom and a large family room.
  • Standard features include high-efficiency central heating and air, upgraded appliance packages, all electric utilities (gas available upon request), low-maintenance exteriors, exterior security-lighting packages, prewired for phone and cable, and countless other benefits designed specifically to appeal to potential tenants.
  • Buyer selected options include flooring, siding, cabinet, countertop and paint finishes.
  • Property management is available and your property manager can initiate the tenant search during construction to minimize your holding costs before occupancy.
  • Discounts available for multiple properties and cluster communities.
  • 5% deposit required

Numerous bedroom counts and floorplans are available in duplex, triplex and quad models, as well as cluster community layouts with common areas.  Feel free to contact our office for information and floorplans.

What type of cashflow can I expect on new construction?

The following is a cashflow analysis based on actual rents received by the owners of 2 of our new construction duplexes.  As you can see, even after property management fees, mortgage payments, property taxes, insurance, and a set-aside for contingencies, the returns on these properties are tremendous.  With a suitable downpayment, the cash-on-cash returns on these duplexes far surpassed what these investors would have earned on their funds in savings or money market accounts.  The added potential for tax benefits related to rental property ownership further strengthened their return on investment.

If you're looking for a funding source for your downpayment, keep in mind that funds in your retirement account can be leveraged for real estate purchases with the help of a self-directed IRA.  By leveraging your retirement funds, the returns earned on these properties can be tax-deferred, and in some cases tax exempt!  Call our office to find out how to leverage your retirement account for even greater returns.