Adding new construction to your SFR investment portfolio is a simple way to increase your return potential—even if you’re already experiencing success with older properties. Diversifying your portfolio with a blend of new and older homes can help you balance risks, appeal to a wider tenant base, create financial stability and remain flexible and resilient across economic cycles.
Managing Risks Through Diversification
Mixing new construction with older homes helps strike a balance between the risks and rewards of each. For example, older properties in established neighborhoods may be more affordable to buy on the surface but may come with wear and tear that necessitates renovation leading to unexpected repairs. Older homes are also more susceptible to higher maintenance costs due to current climate realities.
Brand-new homes in emerging markets might be an initially higher price but are move-in-ready, featuring contemporary finishes and energy-efficient designs that can command a premium rental rate compared to homes built just a decade earlier. Many newer homes—including those available on Lennar Investor Marketplace—also come with warranties. Additionally, they’re built to current building codes and are more energy-efficient.
Capturing a Broad Tenant Base
As more people rent by choice, their preferences play a bigger role in their search for an SFR. A diverse portfolio of properties helps you attract a wider range of tenants. While there will always be renters looking for classic homes in established neighborhoods, many of today’s renters are actively seeking and willing to pay more for the lifestyle-driven characteristics new construction offers, such as modern finishes, energy efficiency, open floorplans with at least three bedrooms and home set within amenity-rich communities.
Even renters who prioritize affordability and larger lots—often associated with older properties—can find what they need in new construction. This is especially true if they’re open to moving to suburban areas—a migration trend that’s gaining traction.
Plus, when you invest with Lennar in markets with ongoing community development and infrastructure improvements, you might find brand-new homes in neighborhoods you wouldn’t expect to be up-and-coming.
Overall, a mix of new and older properties helps you maximize occupancy and rental income by appealing to both lifestyle-driven and value-focused renters.
Maintaining Investment Flexibility While Creating Financial Stability
A portfolio that includes both older and new homes allows you the flexibility to shift funds or attention between properties depending on market conditions, tax incentives and real estate cycles. In every cycle, new and older properties hold distinct roles. Owning both lets you pivot between holding, improving or selling in a way that best suits the current environment.
While diversity offers flexibility in your investment strategy, it could help enhance financial stability. New properties can improve overall portfolio value and appreciation potential, creating valuable collateral for refinancing or sale and increasing long-term returns.
When you diversify with a blend of new and older properties, your SFR investment portfolio can be stronger and better positioned for growth. At Lennar, we’re here to support you by providing access to new homes in 90 of the most desirable markets nationwide, complete with the new construction characteristics you need to strengthen your diversification goals.
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