Is it worth investing in a new development?
When you invest your hard-earned money in a property you hope for the best financial outcome. Investment is a delicate balance of risk and return. Typically, the greater the risk, the better the potential return. When you are considering investing in a property, some assume that pre-owned and built homes are the best option. But another option that shouldn’t be overlooked is investing in non-traditional properties, such as new real estate developments. Real estate developments can be for commercial or residential purposes, and can encompass everything from retail, industrial, single- and multi-family homes. Here are some pros and cons to think about when investing in new developments.
- Developments are cheaper: Although you pay retail value for developments, you may be getting in on the development at its lowest price. That should minimize your risk and maximize your gains when the value of the development goes up.
- Get incentives from construction companies: Sometimes, construction companies offer incentives to entice you to invest in their developments. They may offer a cash that you can use. If you are offered incentives, you should consider using at least 20% of that amount toward closing costs so you can further decrease your short-term costs.
- New materials and low maintenance costs: New projects will typically have updated new features and state-of-the-art technology. That generally means lower maintenance costs, since everything is new or has updated amenities and features.
- It’s a risk: Investing in a new development means risk, since you are paying for a property that may or may not gain value. However, you are getting in before new residents, who could potentially drive up the price. Construction companies usually tend to invest their money on projects they expect will be successful, which could mean a worthy risk for you.
- Unknowns: The unknowns include the amount that will be charged for property taxes, and whether the value of the property will appreciate. You also may not know the exact construction timeline or location. When you keep these variables in mind, you are in a better position to make an educated investment that will satisfy your needs.
There are rewards and risks with any investment. The benefits of investing in new developments includes the new features on the property, an early buy-in, and potential incentives. On the other hand, you have unknowns such as taxes and future value. But you will be one of the first to invest in the new venture. One way to feel confident about your investment is by speaking with the construction company, assessing the position, and then making your decision. New developments are a great opportunity if they fit your needs and your risk level.
If you are considering a new development and have any questions on whether or not it’s right for you, reach out to one of our agents. At Vámonos Realty, we will help answer all your questions so we can make sure you’re buying a development that’s right for you.