Anyone who wants to invest in real estate is always faced with the difficult question of which property is ideally suited as an investment. The solution is often to buy a newly built apartment. But even apartments that are new or just a few years old have advantages and disadvantages. We will examine these for you in the following article.
Definition of “newly built apartment” – what is that exactly?
Many people think of a newly built property when they hear the term “newly built apartment”. In the real estate industry, however, “new construction” does not just refer to a property that has just been completed. There are also older new apartments, for example from the 90s, which are referred to as new buildings. The demarcation to the apartment in the old building is in the area of the year of construction of approx. 1955. It is therefore always necessary to question the year of construction of an object and whether it is is a first occupation (after renovation or new construction).
Advantages of new housing
Regarding all the pros and cons of new housing, a distinction must be made between older new housing and recently constructed new housing. For buildings that are really just a few years old or just finished, there are some advantages.
Contemporary floor plan
The housing needs of all people change significantly over time. The floor plans of newly built houses are therefore always contemporary and well thought out. The current focus is on designing the most compact, optimized room layouts possible due to rising real estate prices. At the same time, open spaces are gaining in importance. Practical home office options are planned for larger apartments.
Good structural standard of the building
When a building is built from scratch, it must meet strict building regulations. Modern heating technology, contemporary materials and an elevator are standard. In addition, air conditioning can be prepared and the possibility of using high-speed internet in the apartments can be created. For larger projects, shared areas can be set up. For example, a fitness room or a roof terrace as a common area.
Warranty for newly constructed buildings
If a house is completely rebuilt, there is a certain security for buyers. Because developers and craftsmen must be liable for having carried out their work conscientiously and with the appropriate quality. In the case of newly built houses, it is precisely defined in advance, in the construction and equipment description, with which quality standard and what materials to build with. The correct execution can be checked by an expert.
If there are difficulties that are related to the warranty, these must be remedied by the executing craft business or the property developer at their own expense. As a result, buyers of newly built apartments have a certain amount of security that problems with the property that could possibly cause high costs will not arise immediately.
Current design promises good rentability
In the case of newly built apartments, these usually also correspond to the current design standard. In the case of simple apartments that are suitable for investment purposes, we are not talking about great luxury equipment, but simply about good materials that also visually meet the zeitgeist. This includes, for example, real parquet flooring, for example in oak, i.e. not too light and not too dark. Large, plain tiles in the bathroom, for example gray or white. If there are open spaces, water connections are usually already available.
At first glance, this all sounds very natural. But in old buildings and older new buildings, it often happens that ugly tiles are downright deterrent. In a newly built house, the common areas are also equipped in a contemporary way. A good visual impression ensures that the property can be rented quickly and easily accordingly an important factor for investors.
Favorable operating and maintenance costs
Few repairs, well-insulated walls, modern technology – all of this ensures low running costs. For the maintenance of a newly erected building, a large amount does not have to be budgeted for in the first few years. The situation is completely different with older new buildings, for example from the 1960s and 1970s. In fact, there is no longer any advantage over old buildings. The renovation of pipes, the roof or painting the facade can cause high costs. Recently built new buildings have a clear advantage here. Larger work and considerable costs can normally only be expected after about 20 years.
A modern new building not only brings advantages for the owners. Tenants, who can look forward to lower heating costs, also benefit from the good building fabric.
Buy apartment packages
From an investment perspective, there is another benefit when a project is just being implemented. Anyone who is convinced of a building can clarify whether several apartments can also be bought as a package. like that you have a stronger negotiating position and, in the best case, can Generate price advantages for you. In addition, the administration follows slightly easier if you own multiple properties in the same house.
Disadvantages of new housing
There are also different points in the advantages of new apartments, depending on the year of construction of the property. Now let’s look at these in detail.
High purchase price
If a building is newly built, the purchase prices for the apartments are often significantly higher than for old buildings. After all, all legal framework conditions must be fulfilled here structurally. Labor and building materials are currently (as of early 2022) expensive and land prices and construction costs are rising. The erection of the building involves a lot of bureaucracy and high costs. At the same time, developers know that they can achieve attractive purchase prices in these times of high demand and low interest rates. This is why new housing in urban areas is expensive. Especially if they have open spaces and were generally built according to high quality standards. Investors have to bear these high acquisition costs first wear. Whether they are always fully passed on to tenants must be assessed individually (depending on the location of the property, etc.).
When a large new building project with numerous apartments is completed, many of these properties come on the market for rent at the same time. This creates a certain amount of competition in-house. Interested parties can easily compare and have different objects to choose from. This can be a certain disadvantage and delay the initial rental. Whether this is the case depends on the respective real estate market. If there is already a large excess demand, in-house competition is not a problem at all.
Older new buildings as a black box
Caution should be exercised with new apartments built 30 or even 40 years ago. Before you buy, you should check carefully what renovation work has already been done on the building. Because with older new buildings, it may be necessary to carry out basic maintenance measures, which are cost-intensive. A new roof, a modern heating system, pipes in the house or even a renovation of the facade – all of this is work that will have to be done over time.
Refurbishment: different owner interests
In some new buildings, these tasks are gradually completed. They are less important and can be covered by the reserves of the community of owners. It becomes difficult if nobody takes care of the ongoing maintenance. Then a lot of work can be urgently needed at the same time. If there is not enough capital, it gets tricky. In addition, there are different interests of the owners. Those who live in the house themselves usually want to maintain it earlier and better. Those who rent are often in agreement with cheaper solutions. That can cause discrepancies between the owners.
Older new-build apartments can still be great investments. Just check in advance what work has been done on the house and apartment you want to buy. The property management can always provide documents on which work is foreseeable in the near future and how the costs incurred will be covered. With a thorough examination, it is therefore also possible to make good investments in older new buildings in an uncomplicated manner.
Buying a new apartment: conclusion
As is so often the case in the real estate industry, the following sentence applies to new-build apartments: “It all depends…” – because new construction is not just new construction. Recently built homes bring great benefits. Especially with regard to the structural standards, the equipment and the resulting ease of renting. This contemporary quality standard also makes it easier to finance the purchase, because banks also appreciate the advantages of a new building.
In the case of older new buildings, on the other hand, it is necessary to check the condition of the apartment and the entire property. The year of construction alone says nothing about whether a property is a good investment decision. You always have to take enough time to get to know the documents about a property individually and in detail. Only then can you really say whether a property should be bought or not.
Meet Bradley Gibbons, a successful real estate agent and author based in the United States. With over 10 years of experience in the industry, Bradley has a deep understanding of the local market and a proven track record of helping her clients buy and sell properties. She is known for her ability to connect with her clients and her extensive knowledge of the latest real estate trends.
In addition to her successful career as a realtor, Bradley is also an accomplished author. She has written several books on real estate, including “The Insider’s Guide to Buying a Home” and “Selling Your Property: A Step-by-Step Guide.” Her books are praised for their practical advice and easy-to-understand language, making them valuable resources for both experienced and first-time home buyers and sellers.
Bradley is also a frequent speaker at industry events and a regular contributor to real estate publications. In her free time, she enjoys traveling and spending time with her family.