BiggerNews: 2024's Cheaper, Better, Cash-Flowing "Sleeper” Investment

BiggerPockets Real Estate Podcast

BiggerPockets

Investing, Education, Business

4.8 • 16.6K Ratings

🗓️ 6 September 2024

⏱️ 38 minutes

🔗️ Recording | iTunes | RSS

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Summary

Are new construction homes a good investment right now? Well, that depends. If you want a lower price for a property in a better condition, with a lower mortgage rate and the ability to charge more rent, then new construction homes are what you need. This “sleeper” investment is now cheaper to buy than a regular rental property, but since it’s a new build, it comes with a fraction of the headaches and repairs than most “used” homes. So if they’re cheaper, better, and make you more money, why isn’t everyone buying a new home? Kathy Fettke has been investing in new construction homes for decades. At first, it was just a way for her to have a more passive real estate portfolio. But now, she knows she can make much more with new homes than buying existing rentals. Since so much of her portfolio is new builds, we brought her to the show to share why this investment may be the best on the market. We’ll get into new construction pricing and why new homes are CHEAPER than existing homes but offer better amenities, safer structures, and often much lower insurance prices. Next, how to get a rock-bottom mortgage rate by negotiating with builders (we’re talking three or four percent interest rates!). Plus, Kathy shares precisely how to ensure you’re buying a new home in the path of progress so you can rake in appreciation. In This Episode We Cover: Why new construction rental properties may be one of the best investments of 2024 Saving serious money on your mortgage with rate buydowns paid for by the developers Why new construction home prices are CHEAPER than existing home prices in 2024 Buying in the “path of progress” to ensure your home value keeps growing Factoring in appreciation into your next deal and whether you should account for it at all And So Much More! Links from the Show Join BiggerPockets for FREE Let Us Know What You Thought of the Show! Pre-Order Kathy’s New Book “Scaling Smart” Property Manager Finder See Dave and Kathy at BPCON2024 in Cancun! We’re in a Home Construction Golden Age—Here’s How Investors Would Benefit From Building On the Market Podcast Connect with Kathy Connect with Dave (00:00) Intro (02:03) Buying New Homes at a Distance (06:42) The “Path of Progress” (11:11) New Homes vs. Build-to-Rent (19:25) Get a Lower Mortgage Rate (24:14) Where (Not) to Buy (30:10) Forecasting Appreciation Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/real-estate-1014 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email advertise@biggerpockets.com. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	We all know that housing inventory is super low and it's super frustrating.
0:05.2	Even when you're ready to buy, there often isn't anything in your buy box in the market
0:10.3	you want to invest in. But I think there's a sleeper category of inventory
0:16.0	that most investors are overlooking. And I know this sounds crazy but hear me out
0:21.7	it's new construction. and listen I get it
0:25.0	investors often say new construction is a bad investment it's not the cool thing to do and
0:30.1	typically that's true but listen listen to this, before you judge, right now, the median newly constructed
0:36.3	home is cheaper than existing homes. Yeah, you heard that right. New builds right now are cheaper than used homes.
0:46.5	And this is a pretty unusual situation that I think investors should probably think about taking advantage of.
0:54.4	I think it's time that we all ask ourselves is new construction actually a good
0:59.3	investment right now. Hey everyone, it's Dave and welcome to bigger news.
1:08.8	I'm really excited to talk about new construction because as a data analyst the numbers just make sense to be right now there's a lot of things to like and the deals kind of seem to be there.
1:19.2	But I admit I have never bought new construction and never really considered it seriously
1:24.8	until the last couple of months so I'm going to bring on some backup.
1:28.8	We're bringing on bigger pockets on the market podcast host Kathy Fecky and we're bringing her on because
1:35.1	Kathy has been investing in new construction for many years she also builds
1:39.3	new construction so I figured she'd be the perfect guess for us on this show.
1:44.0	And on today's episode with Kathy, we're going to talk about how new construction stacks up in overall housing inventory.
1:50.0	We'll talk about why negotiated with a builder is different than negotiating with a
1:55.1	typical seller and we'll also talk about how Kathy thinks about appreciation
1:59.1	when underwriting new construction deals. So let's bring Kathy on. Kathy, welcome to the Bigger
2:05.8	Pocket's Real Estate Podcast. Thanks for being here. So happy to be here. I know I say
	...

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