When the economy is strong, homeowners and investors buy real estate any way they can. Some purchase pre-owned houses, while others build new homes. But the question still remains, which of these types of houses makes the better investment? While there are many factors to consider, you can make the smart choice for your situation by reviewing the biggest pros and cons of each.Get Started
New Construction or a Pre-Owned Home?
Pre-built and custom homes have distinct characteristics, and each type of house will serve yours or your family’s needs differently. Though what is certain is that by being informed about the differences between the two types of homes, you can more accurately predict which of them will yield the best return for your investment. At HCI, we are a company of experienced custom home builders in Gainesville, FL, but we also have objective knowledge of the differences between our new homes and the houses currently on the market. If you are trying to decide which of the two to choose as your next home or investment property, first consider these pros and cons of each.
Whether the construction all has been finished is a big consideration when buying a a pre-built home. A house that is midway through a remodeling project or even the initial building phase presents an inconvenience (if you cannot move in immediatley) and potential expenses (if you have to pay to finish the work). As long as the construction is complete, the house is ready for you to live in.
The neighborhood around a pre-built home is typically established, as well. This means you will likely be surrounded by neighbors and live in a developed area — how developed depends on whether you live in a rural, suburban, or urban setting, all of which are present in North Central Florida.
A house’s foundation takes time to settle and level off. The process is usually finished by the time you move into a pre-owned home. At the same time, you should never assume an older house is structurally safe. Instead, have a contractor check for surprises that could pose a danger.
Renovations are also a consideration. A home that has been updated by a remodeling project will likely have modern or custom touches, although they may not align with your style, per se. You can make changes yourself, so the house better suits your tastes, but keep in mind that local zoning laws and building codes may restrict the alterations to an older home.
Pre-owned homes naturally have an older the structure, but the question is whether the structure is only a few years old or multiple decades. Unmaintained foundations can cause problems and unforeseen costs over time. In such cases, the repairs are not limited to the concrete but also the plumbing and electrical systems, as well. So while the upfront price of a pre-built house might seem low, after factoring in the cost of renovations or repairs, you could be looking at a larger investment.
The warranty on a home also tends to expire after a few years. As a result, you could find yourself facing a long list of house repairs with no financial relief to assist you. At this point, your choices are to shell out money for the work and deepen your investment into the property or move on and sell the house to a new owner; in either case, you likely stand to lose capital in the deal.
Even if the pre-built home is in pristine condition, it is not necessary designed for your needs. Customizing the place to your liking requires remodeling. Remodels compared to new home constructions involve more uknowns. Building a new house from scratch means there are no surprises. Once you begin remodeling an older home, there is no telling what secrets you could find, from out-of-code electrical work to mold (a common problem in Florida homes due to the humidity).
A custom home is personalized to the style, tastes, and needs of its owners. As a family home, a custom house can feature ample living areas, enough bedrooms and bathrooms for all residents to have their own, as well as design touches that every member of the household can enjoy, from an upstairs toy room to a full kitchen with deluxe appliances. As an investment property, a new home gives the investor an opportunity to create a house that satisfies the current market demands from home buyers.
Green building techniques have become more prominent in recent years in Florida as more homeowners want to reduce their impacts on the planet while also reducing their utility costs year-round. The process of making an older home energy-efficient can be extensive, as fundamental structural elements of the house must be torn out and replaced. But new homes are much simpler to make into green buildings. All a builder must do is utilize eco-friendly materials from the beginning — the use of these sustainable products is a highlight of our building practices at HCI.
New constructions also have far fewer problems with electrical or plumbing systems or with appliances because all of the components are newly installed and the latest technologies on the market. Not only do homeowners not have to worry about construction-related problems after move-in day, but the money saved from not doing repairs results in a new house producing a better return-on-investment long term.
Home buyers have misconceptions sometimes about the cost of building a new house versus buying a pre-built one. But for those who think new home construction is a lengthy or complicated process, the reality is entirely different. At HCI, our new home builders follow an efficient and collaborative process. Our clients thus enjoy memorable building experiences and are rewarded with superior quality homes delivered in reasonable timelines.
Higher costs are another misconception about new homes. The sticker price of pre-owned homes is often attractive, but that is before calculating the long-term costs of repairs or renovations. Once these are factored in to the price estimate, the net cost of a used house actually equals or runs higher than the price to build a custom home — sometimes building a new home is even flat-out less expensive than buying a house.
Newly built homes also have financial advantages that are not always factored in from the beginning: when the savings from not having to perform home repairs and from living in a more energy-efficient environment are factored in, a custom house provides a for a cost-effective way of living long term. But money is not the only upside. Custom homes also offer quality-of-life benefits to residents who get to live in a place designed to enhance their daily lives.
Whether you are convinced of the advantages of new home building, or you still have questions, please contact HCI today!