New Home vs. Old Home

So you’ve decided to purchase a home and hope to flip it for a healthy return on your original investment. The question is whether you’ll buy a new home or an old home. There are several factors worth considering before deciding on which to choose. If you buy a new home before it’s been built you can often get a better deal on it while it’s simply at the planning stage. But on the other hand buying an older home may work out cheaper. But there is no golden rule and both of these options have pluses and minuses.

Very often developers try to pre-sell a certain percentage of the homes or apartments in a new complex well before they are even built. This pre-sale money is usually used just to fund the project and get construction off the ground. As an incentive to attract these vital first customers the developer will offer new homes at a discounted rate if purchased at the planning stage. Purchase may only involve a small down payment of 15-20% depending on the terms of the agreement.

As the project begins the prices of the units get more expensive and this is considered in the developers plan which is why they can offer low pricing and special financing options on the new homes before they are even built. The drawback here is the waiting period which can be 1-3 years depending on the size development but chances are you will be able to flip at a profit once the units are complete or even during the construction stage.

Buying an old home should logically be cheaper than a new one and in most cases it is. Often they can be fixed up and made to look much better with minimal renovation cost and even cosmetic work. This can then bring a healthy return on the investment after resale. But the negative side is that if the old home is in a really good area often the state and condition of the home may not be the biggest factor in determining the price. Often people want to property and plan to tear the home down anyways. So buying an old home in a very desirable area is not always a cheap option.