Author Topic: Turnkey - New or Used Property  (Read 666 times)

kenmoremmm

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Turnkey - New or Used Property
« on: October 21, 2018, 11:43:49 PM »
I've been sitting on cash for half the year now that was earmarked for a REI purchase. One deal fell through, and then I've gone through a bit of analysis paralysis.

Where I'm currently stuck is on what house to buy based on year constructed. One company I've looked into has both used and newly constructed inventory. Both use the same materials for floor, paint, roof, etc, and the properties that they acquire to rehab and resell are pretty thoroughly repaired (new water heater, roof, floors, plumbing fixtures, paint, landscaping, etc).

The type of property I'm looking to buy is in B+ to A+ neighborhoods. If I can get a new house in an A neighborhood (granted a new development so probably lacking some subtle established community feel and proximity to the core of the city) or a renovated house in an A+ neighborhood for similar price and cap rates, is the no brainer choice to by the new house? Or, do I open an unknown can of worms with systems that could go kaput shortly after the 1 year home warranty (PEX brakes, electrical issues, foundation issues) since it's a new development and the kinks haven't been worked out over 40+ years?

Goldielocks

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Re: Turnkey - New or Used Property
« Reply #1 on: October 22, 2018, 12:10:08 AM »
If condition is very good, then it is all about location.   

You don't want a new development if you are going to sell in 5-10 years, because as brand new homes come up within a couple of miles, they are sold before yours because of "new" and "model home" selling tactics.  I saw this happen to two relatives of mine, in different cities.

kenmoremmm

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Re: Turnkey - New or Used Property
« Reply #2 on: October 22, 2018, 12:55:01 AM »
goal is long-term buy and hold and pass down to kids.

Freedomin5

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Re: Turnkey - New or Used Property
« Reply #3 on: October 22, 2018, 01:57:19 AM »
Iíd go for location. A brand new house in a new development is good if the location is good. For example, if the city is quickly axoanding and will soon encompass this neighborhood in the boonies, or if the city is extending their subway system to this neighborhood, then itís a good location, even if itís a new development.

Goldielocks

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Re: Turnkey - New or Used Property
« Reply #4 on: October 22, 2018, 04:06:22 PM »
goal is long-term buy and hold and pass down to kids.
Even less worry about systems going kaput then...  it will amortize out.

The new home warranty will take a bit of work from you in the first year to ensure all deficiencies are corrected.   
One element -- older homes (1975 and earlier) are built with much better quality lumber than today.   But have older plumbing / wiring and insulation / vapor barrier, which may not have been redone in your "totally renovated" remodel... so operating expenses can be hired for the older home, of the same size.    Highly annual expenses DOES make a difference over 20 years.