Maintenance on New Construction vs Existing Properties

build-to-rent income & expenses maintenance market research new build new construction Aug 25, 2021

Build-to-Rent vs Existing Real Estate

Sherida Zenger
Obviously, you don't know what you're getting yourself into an existing property, right. So you may have a bunch of repairs that you're not quite aware that you have to do yet. Or you will figure that out when you do your due diligence.

So there may be more money upfront doing something as far as existing goes to get that so it is to the quality that you want for a tenant to live in. As far as new construction goes, it's brand new. I mean, you're gonna have less headache upfront, but it's probably gonna cost a little bit more to purchase that property, give or take. Obviously, there are risks both ways, but for a new property, you have to wait for it to stabilize existing, you may like Jay said, you may already have tenants in place.

Steve Olson
So I think that's what you were talking about, things as they are your leases, you know what that is, it's signed for X dollars per month. And you can look back in the rearview mirror and see over the last, you know, they call it like at 12. Or, you know, t 24, you know, a certain amount of months, trailing 12 of here's where my costs have been on maintenance and insurance and all those other things, right.

You know, what your cash flow stream is going to look like when you close on the property relatively certain. What you're saying is, there are some things that you still might not know, even though it's been there, it's been performing as a rental for decades, right? Exactly.

Buying an existing property you'll need to vet out current leases. Is there room for improvement there? Are they over leased? Is the property manager even collecting all of the rents that were represented to you? Lastly, what repairs are coming down the pipeline?

Well, if it's brand new construction, my furnace isn't going to kick the bucket. One year in, it's going to be reliable, this property is going to generally be reliable.

No, absolutely not. Why not? Because they're that builders doing the best that they can, but there's still going to be stuff that doesn't work, right, you may grid into your unit and say, Oh, my cold water is actually my hot water and things like that. There's just new tweaks, it's with any new construction, you've got to go actually live in it, to figure out what's wrong. And then you're gonna have warranty requests. And usually, a builder will cover that for the first year.

So if you've built your own property and you've moved into it, you know exactly what we're talking about right now. Sherida just said, you know, the cold waters, the hot, hot waters, the cold, right? The door doesn't shut all the way the window is stuck over here.

These things don't mean that you hired a bad builder. Now they could, right. But new construction needs time to be broken in. And so a tenant is coming in and they're breaking that property in. Yeah, you can expect some warranty items, but other things are just part of you got to get the property settled down.

I've noticed there can be kind of a little bit of a break-in period for the first couple of months. And then it really chills out for quite a while on new construction. Have you noticed that Chase?

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