Profiting from Pre-construction Homes
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One way to purchase investment property in Tucson Arizona (AZ) is to buy pre-construction properties from builders in Tucson (AZ) or surrounding areas. By doing so, you as an investor can leverage your investment and in essence obtain property for a nominal earnest money deposit (typically 10% or less) and use the build time to find prospective tenants, and look for market appreciation to obtain "built in equity". Most new built homes take anywhere from 6 months up to 18 months sometimes to complete construction. By purchasing these properties not only do you receive a BRAND NEW rental property but you also create a timetable to assist in locating a tenant, management companies (if applicable) and, as before mentioned, the opportunity to sell the property you purchased 6-18 months ago for a higher price than you originally paid for the same floor plan. While pre-construction purchases still do bring risk as any investment does, the opportunity is there for you, as an investor, to control property for minimal amounts of money and employ the power of leverage to hopefully allow appreciation of your property.
Buying pre-construction property also has a few by-products associated with it, that all things considered are hard to beat.
- It's a brand new home. Typically, tenants are much more willing to pay higher rents to live in a "new" home vs. an older, less attractive home. This gives you the investor an upper edge when trying to secure prospective tenants to lease your investment.
- Just about all new homes come with a warranty included. Some warranties are for up to 10 years. This limits your out of costs expenses as time goes on due to expenses. Now, not all of these warranties cover every item in the home for the entire warranty period, but most structural items are covered for many years. Each builder offers different warranties. Be sure to check with the builder to get the exact items covered and timeframes, since they will vary with the builder. Most builders charge nothing more for the warranty, so this means you as a landlord save money on repairs as time goes on, thus increasing profit on the investment.
Buying a new home is not like buying a "resale" property. There are many important issues to be decided, including which lot you purchase, floor plan, options included vs. upgraded, and structure upgrades (bedroom conversions/bathroom conversions). All these decisions will affect the market price of your property and it is highly recommended that you obtain the services of a professional real estate agent to assist you with these decisions. The builder pays the commission, which means it costs you, the investor, nothing. There is also the MISCONCEPTION that if you do not use a real estate agent to represent you, then you will get a lower price on the home. This is simply not true. All builders rely on the real estate public (brokers, agents, etc.) to bring in a high majority of their business. Without them, they would simply go out of business. So to protect the real estate professionals and sustain their own business, just about all builders (with the exception of very, very small custom builders who build 1-2 homes a year) sign a BUILDER BROKER AGREEMENT. This agreement is between the brokers and the builders, but what it means to you - the real estate public/investor - is that the builder cannot and will not offer a lower price to a buyer regardless of whether or not a buyer is represented by an agent. In response to this, the real estate brokers ensure that they will bring in their clients to show them what new construction can offer. So, to protect their number one source of customers, the builders are willing to pay for you - the public/investor - to be represented in you purchase. It speaks for itself that you should hire a real estate agent to assist you in your purchase.They know the market better than anyone, and also know the builders' products.
Michael Oliver has over 150 sold homes worth of experience to help you as an investor to optimize your real estate investments. Being a real estate investor himself, he understands the issues and pitfalls that can be adverted, and also has years of experience working with investors. If you would like additional information on how pre-construction properties can benefit you, please fill out this questionnaire or feel free to contact Michael directly by calling (520) 247-4134.
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