Why Buy New Construction? The FloridaBuilding Code.
More and more of my investor clients are asking about new construction and several are opting for new builds over “bargain” resales.
The number one reason to consider new comes down to the quality of construction. The builders will of course give you their song and dance about how wonderful a job they do, but what is reality? Reality is the Florida Building Code. Prior to 1998, there were codes administered and enforced differently by more than 400 local jurisdictions and state agencies. Enforcement was spotty at best. In 1998 the legislature authorized the Florida Building Code to be the sole document incorporating all building standards adopted by all enforcement agencies and state agencies that license different types of facilities. The first edition widely considered to be the bench mark for improved standards in Florida is the 2001 Code.
You can read all about the code on the state’s website:http://www.floridabuilding.org/fbc/information/building_commission.htm
Here’s a very quick summary. The code covers all private building construction in the state. It’s divided into seven sections: plumbing, mechanical, fuel gas, residential, testing for hurricane zones, electrical and existing building code. Most importantly the code is updated every three years and the years to remember are 2001, 2004, 2007, 2010, and etc. For example, a home built in say 2008 will have been constructed and inspected to a tougher standard than one built in 2006. Is it a perfect guide to quality? No of course not. Clearly, a lot of inspections during the crazy times in 2005 to 2007 turned out not to be very rigorous. Never the less, if you are comparing something built new today versus a bank owned bargain built before 2001, there will be a big difference in standards.
What are other reasons my investors consider new construction?
Rent-ability – Tenants love being the first people to live in a new property and pay a premium. My investors typically have tenants the day after they close.
Peace of Mind – “Bargains” come with issues that need to be addressed and paid for, which can be daunting when you live thousands of miles away. New comes with a warranty and anything gets fixed in the 1st year. (Hint: tell the first tenant to be very picky about any problem.)
Competitive Prices – Builders are not dumb. They see the prices on resales. They know they can get a premium for new, but it can’t be too much or they won’t sell.
Easy Finance – It is much much easier for an investor (especially a foreign national) to get a USmortgage on new construction than to get one on a resale.
Finally, let’s close with the advice I’ve personally followed as an investor. Never buy direct from the builder. Their sales rep does not represent you. They are the agent of the builder. Their job is to sell you that house. They will be very nice people and have very nice sympathetic smiles. Having an agent on your side will not cost you any money and in my experience as a buyer and as an agent will almost always save you money.
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