Buying New Versus Buying Older Homes

Buying New Homes versus Older Homes: What will fit your needs best?

Whether you are buying your first house to call home or you are looking for a property to earn a passive rental income, the question is, should you buy a new construction home or an older more established home?  There are pros and cons to both.  Below are a few things that you should consider before searching for your next dream home or investment property.
See also "What to look for when buying a home"

Benefits of buying a new construction home

• Floor plan: Newer homes have a modern floor plan that fit the changing needs of homeowners. Chances are good that the layout will lean to having, wide-open floor plans. Rooms tend to be larger and brighter with more natural light and large windows. You also have the option to opt for a custom-built home. Work with the contractor to create a traditional or modern layout that works for your lifestyle.
• Personalization: Whether you are buying a custom constructed new home or just purchasing in a newly constructed neighborhood, you can still request upgraded materials and add-ons.
• Efficiency: New appliances, heating and air conditioning systems, and newer windows and insulation are more energy efficient. This makes the home less expensive to heat and cool than older models translating into lower monthly utility bills.
• Smart and healthy: “Smart” technology options can now automate your home saving on energy costs and provide more security. New homes use healthier paints and building materials, improving indoor air quality.
• Maintenance: Since all of the appliances, roofing materials and systems are new, they require a lot less maintenance and are likely covered under warranties. This more predictable monthly home ownership costs and lower insurance premiums. Warranties can protect your new home for years before you need to undertake any major repairs.
• Amenities: Planned communities will often have parks and green spaces as well as new schools.  It all depends on the builder.  Research the building company to find out how they typically plan their communities.
• Timing: There is no rush on the bidding process because it often take 5-6 months for the new construction to be completed.

The Case for Buying New Properties for Investment

• Modern: Requires Less Maintenance and Renovation. There won’t be any renovations that need to be completed to increase the appeal of the property. The designs will fit modern tastes so it will be easy to attract new tenants. Everything will be move in ready so no need to deal with putting any sweat equity into the property.  This means
• No hidden surprises: Home inspections should not be much of a problem because you know from the start that everything is new and in great condition. If for some reason an appliance or system breaks down you will most likely have warranties that will cover those repairs.
• Lower energy costs: If you are a landlord that offers to cover utility bills, the newer construction and appliances can save you as much as 30% on these costs.
• Tax savings: Property tax bills are calculated based on the prior year’s assessment, and for most new builds, the property was nothing more than an empty lot the year before. It could take up to two years for the property’s assessment value to catch up to its current market value, and during that time, your tax bills will be markedly lower than those of older homes in your area.
• Larger earnings potential: More renters prefer newly built homes to existing houses. These renters are willing to pay more for new properties as well, especially if they come with higher-end modern amenities. This results in a steadier cash flow, lower vacancy rate and often a higher resale value when you finally decide to let the property go. All of which equal more money in the bank for you.

Reasons Why Buying an Older House Is a Great Idea

A newer home can be enticing with newer appliances and materials and the peace of mind that comes in the form of warranties, but sometimes the charm of an older home may suit your needs better.

Top reasons why buying an old house might be the best decision for you:

• Location: New construction is usually built further away from the major metropolitan areas where there is more land to build on. This means longer commutes if you work in the major cities. New homes are also typically built on smaller lots whereas older homes may have a lot more space. If a large backyard is high on your list I would suggest looking at older more established homes.
• Landscaping: Older homes have much more mature trees that shade the home in summer, protect against wind in winter, and block out traffic noises at bedtime. Also, new homes often have little to no landscaping to begin with.  It may take years before the property has a lush green lawn and could take a lot more work in those years.
• Floor plan: Builders, especially in planned communities, tend to stick with exterior design styles and finishes that appeal to the broadest range of customers. You’ll have to count on post-purchase painting and decorating to stand out from your neighbors.
• Timing: If you’re looking at new homes that are already built, this isn’t a factor. But if you’re building a custom home, it could take several months longer than moving into an existing home. You can expect a custom home to take five to six months, but that varies by market and builder.
• Price: Older homes are generally less expensive than newly built homes. On average these homes can be 10-20% less.
• Quality Construction: Older homes were built to last. The materials may not be as modern but they may still be more resistant to wear and tear. The walls may insulate from sound better as well.
• Character: Older homes typically have more decorative appeal like crown molding, archways, sunken living room designs, or even authentic stained glass windows.

Reasons for Buying Older Properties for Investment

• Location: Buying a home that is central to the best schools and amenities can greatly increase the demand for the property.  This will make it easier to find interested renters and will encourage people to rent for longer periods of time reducing the need to constantly market the property.
• Landscaping: Renters often don’t want to deal with large landscaping projects.  If the landscaping is already established it will be easier to maintain and drive up the value to the renter.
• Character: Newer homes can come off looking like “cookie cutter” designs. Older homes tend to have more unique features that set them apart from other available homes. This can be a huge draw to potential renters
• Market Research: Buying older homes will give you more data to make your buying decision. Established neighborhoods have statistics on the schools, crime rate and comparable home sales and rents.  This can give you a better idea on what to expect in an income property both in demand and profitability.
• Price: Not only are older homes usually priced lower, there is usually much more opportunity to negotiate price with a home owner than with a builder.
• Quality Construction: Older homes were built to last. The materials may not be as modern but they may still be more resistant to wear and tear. The walls may insulate from sound better as well.