REAL ESTATE INVESTORS ONLY
Whether you are a seasoned investor looking for 1 or 100 new rental homes or a house flipper looking to flip a new constructed home, First Home Builders is your builder! If you are an investor who is not interested in owning real estate but may want to participate in funding/lending investments, CLICK HERE
ROI – CAP RATES
With low interest rates, a lot of people are parking their assets in rental homes — and why not? Hands down, it’s a great investment. ROI (return on investment) as the ultimate goal, potential investors can use a property’s “cap rate” (a.k.a. Capitalization Rate – the amount of rent you will receive every year compared to the amount of money you spend) to find the best opportunity. You can now own real estate in your IRA, and real estate has proven to be a very good long-term diversified part of a well-rounded portfolio.
For example, if you purchase a house for $120,000 and have a yearly return of $12,000 after expenses, that’s a 10% cap rate. On the surface, this would appear to be a no-brainer investment.
But what about the hidden costs of the property?
Older home = high home improvement/maintenance costs
A $120,000 home is most likely going to be an older structure that needs some work. Insulation may be inadequate based on today’s standards, which in turn will cost your renters more dollars. You may have to spend a lot of money bringing the house up to code… what if the furnace goes out during the first snowstorm or the electrical panel and wiring are out of date? What will the value of the home be after it’s all depreciated? Hiring contractors can be a huge hassle, especially if you are not located where your investment is. Real estate commissions are part of or built into the sales price. In other words, your great deal could very well end up being a money pit.
New Constructed Homes through First Home Builders
Real estate investors realize a much better ROI by renting out brand-new homes.
Consider this scenario: You purchase a brand-new $170,000 home and decide to rent it out, having a return of $1,400 per month after expenses. That’s an 8.00% cap rate. Compared to the cheaper home in the above example, this rate isn’t all that exciting. However, the beauty of the new constructed home investment is that you escape the endless costs that come with old houses, and you get to reap the following benefits:
1. Location Diversification
The huge value of new construction is that you’re getting A-area homes in up-and-coming areas. At First Home Builders the philosophy is “LOCATION DIVERSIFICATION” why would you want to buy a block of production-built homes in one subdivision by some production builder with substandard materials when you can own multiple custom stick-built homes around different geographic areas.
Your home values will not be limited to the community or development where your investments are located combined with Deed restrictions and HOA fees that will impact the future sales price and decrease your ROI. When the market downturns the concentration of foreclosures we see in subdivisions will not affect your investments due to location diversification.
First Home Builders will typically construct your new investment property on 1/3 to 1 full acre of property, again value added. You can’t pay enough for low crime rates, good roads and schools, sidewalks, and nice local parks. The people looking to rent in our target areas tend to be ideal tenants — they’ll mow their lawns – being surrounded by “like” quality housing. They will be proud to bring family and friends over for dinner, and, most importantly, they’ll pay their rent in full and on time, more often than not.
2. Warranties and New Appliances
First Home Builders offer a one-year limited warranty and a 10-year structural warranty.
Primarily all equipment installed in the home will come with some type of manufacturer warranty. Typically, we may cover anything that gets damaged within the first year. You won’t need to waste time hunting down bids from foundation specialists or putting the plumber and electrician on speed dial.
Further, all our homes come standard with an appliance package, all brand new and never used. The water heater will be brand new, no worries, the roof won’t leak, the windows will not leak air — everything is brand-spanking-new. You likely won’t be answering tenant calls in the middle of the night for quite some time. Our contractors also will commit to doing yearly maintenance or inspections for minor charges.
We say “Stick to the Basics” when buying a New Constructed First Home Builder House. Before the house is even built, you can get in on the ground floor and work with First Home Builders to customize the project. We specialize in keeping your costs down by sticking to the basics…forget the jetted tub, or high-end fridge and fancy window treatments — this could cut $20,000-$40,000 off the home’s price tag, translating to an even better equity position immediately. We also have an inventory of “Move-In Ready or Quick Close Homes” to choose from. The homes will come with our investor discounted price so you should have immediate and instant equity! The more you buy, the more you will save. Homes are sold direct to the Investor through our wholly owned brokerage firm, VH Real Estate in order to save fees and better yet ZERO commissions. Typical savings will be $8,000.00 – $12,000.00 dollars per home!
The Custom New Construction Rent Model = Cash Cow $$
Homes purchased through real estate agents will always include a commission on the property. The land value usually increases before the property is placed on the market and this also increases the selling price. Purchase or Auction type emotions lead investors paying too much for an existing home which in turn can increase the length of time required for a property investor to earn back the initial investment. Dealing directly with First Home Builders gives you the confidence that you will make an educated investment and not be pressured by the low inventory, competition and the emotional ride that comes with buying investment property through the conventional methods. We can diversify your portfolio in many different areas, whether it’s college town locations of Ann Arbor, MI (University of Michigan) or East Lansing, MI (Michigan State University), Livingston County, MI etc.… We believe in the long run a newly built constructed home combined with a location diversified portfolio, will always win out!
New Construction Is a Different Beast
First Home Builders has defined exceptional housing markets throughout the state of Michigan. We can provide newly built home product from the Detroit suburbs to the west side of the state. We have property management contacts that will handle leasing or an in-house brokerage firm that can list your newly constructed home for sale.
Buy New – The Smarter Choice
A new constructed stick-built home can ultimately prove to be a smarter investment in the long run. You can choose your location, you can customize the amenities, and, best of all, everything is new. For real estate investors, that peace of mind is priceless.
First Home Builders® is a Brighton, Michigan-based builder and part of the Vettraino Group of Companies. We specialize in new residential single and multi-family new construction, mortgage banking and real estate brokerage services. We are offering our negotiated partner/supplier relationships to investors through First Home Builders. We provide a higher rate of return on capital in building new affordable homes, either for rental pools or house flipping over buying used or foreclosed homes. We will soon be offering our service to investors in S.W. Florida market more specifically in Sarasota and Charlotte County Florida. Stay Tuned for our Florida Announcement!
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