Why Wouldn’t You Buy New?

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Real Estate

Here is a very true story of a recent experience that I had with one of my investor clients.  This investor is what we call a buy and hold, meaning he buys properties to rent them out.  He doesn’t look for distressed properties like other investors that you see on tv that turn an ugly house into a pretty house and then sell it for a quick profit, that is what would normally be referred to as a flipper.  The flipper investment strategy carries a lot more risk, and the differences between the two types of investors are very different, although there are some out there that do both.

An investor such as mine is more interested in obtaining a clean house.  Getting the best deal is less important than getting a home that is solid, absent of any major problems, and he is willing to pay fair market value for it.  It is most important that he does not overpay or buy a house that we later find out needs excessive repair as this is a long term investment and there isn’t a lot of margin for error.

After a break from our searches due to the uncertainty of what was going on with Covid, my buyer and I started our search.  He wanted at least a 4 bedroom,  2 bath, 2 car garage, single-family home in the Wesley Chapel area, and as I said, he expects to pay fair market value.  In past years this would not be much of a challenge, but because of the lack of inventory, partly due to some sellers holding off, and some pulling off the market because of the pandemic, the demand is high.  Many homes are overpriced, and the good ones don’t last.

The first weekend we went out, we looked at six homes and he picked out two that he liked.  Both were genuinely nice, in great communities, and they were both priced right.  Despite my warning to my client that neither house would last more than a couple of days on the market, and it had already been two, he flinched and they were gone.  This was his first lesson in this current market, you have to be fast.  Btw- if you currently have a home for sale and it presents well, but it hasn’t sold already, there’s something wrong, have your realtor rerun a comp report, and adjust accordingly.

Next time we went out looking my investor was prepared, armed with what he learned by missing out on the first two that got away.  We only had three options that met the criteria this time, so he would have to be decisive.  First house, no.  Second house, no.  Third house, Bingo!  This one checked all the boxes, presented well, and was within budget.  That night he gave me the go-ahead to make a cash offer, and after a little back and forth negotiating, we had a contract to buy.

Then came the inspection, or the beginning of the end as it would turn out.  We knew that there were some red flags going in, as the house was previously under contract twice before and both times it fell through.  We knew that the home had an original roof and AC system.  We were prepared to look past those issues if they were still functioning appropriately.  The roof did not pass the inspection, but my investor, being the reasonable man that he is, asked me to get a second opinion from a licensed roofer.  The news was not good, the house needed a new roof.  It was 16 years old, had wind and hail damage, and signs of a previous leak.  The sad part is, the roof would most likely be covered by insurance because of the obvious storm damage.  It should have already been replaced before going on the market.

This is where I tie in the title of this story.  You see, my investor was only considering previously owned homes.  He hadn’t even considered buying a new build, but with the inventory so low combined with the incentives the builders have, such as credits for closing costs and special financing with really low-interest rates, I knew that was a viable option.  No more worries about leaky roofs, old AC’s, or anything else, it’s all-new. 

After explaining the advantages and long-term investment potential of a new build we went to three new communities, Union Park, Bexley, and Starkey Ranch.  All three communities are great in their own right, but for my investor, he chose a 4 bedroom, 2.5 baths, 2 car with over 2200/sqft under air, primarily, because of the awesome schools and amenities his renters would get to enjoy. Add to that the piece of mind he will have now knowing that his investment is virtually maintenance-free and will pay off for years to come.

If the thought of selling your home and upgrading to a newly built home in one of these awesome communities has crossed your mind, I encourage you to go visit a model home(take a mask) and bring a well-informed realtor that knows about the different builders and communities.  There is no better time than the present to get your current home sold for top dollar and take take advantage of incentives on your next home.


By Rob OConnor