Posted by michaela-ATL on January 06, 2003 at 09:57:30:
Todd,
a lot will have to do with the location. How fast or slow are those houses selling?
A buyer will usually prefer a new house to one, that’s been lived in. So, you can’t really compare the value of a house, that’s been lived in for 18 months with one, that just newly built. There has to be a markdown for a buyer to prefer the ‘older’ one. SO, you have to check that out in the area you’re loking at, what kind of markdown would e necessary and if it would still be profitable.
Posted by Todd (AZ) on January 06, 2003 at 09:27:24:
Newbie questions:
I have questions regarding new homes. In my area (Phoenix), new homes are being built everywhere. I was thinking of buying one of these homes as an investment. The sales price seems to go up approx $25K in the first 18-months of these developments. I was thinking of purchasing at the begininging of the building phase, then lease it for a year and sell once the development is complete. Has anyone tried this? What are the major issues to the idea?
If you decide to do that, make sure the builder/developer has plans to build more expensive houses as the subdivision gets built out. I am currently working with a few developers and they always do this, it provides the buyers with equity and provides the builder with more money per house later in the development(in theory), quicker sales in the beginning, & the money to pay higher mortgage payments as the houses get more expensive. The house I live in was sold at 130,000 when the subdivision was new(4 years ago), they are now building 300,000 homes in the back and my house is now worth around 175,000.
Would you really want to put a tenant in a new house? I would be concerned that the potential damage done by a tenant could negate any appreciation during that year period. It’s not that new homes are more subject to tenant damage than others, but like Michaela said, buyers in that market are probably going to be comparing your home to new homes.