It’s no secret that qualifying for a traditional mortgage is more difficult than it was just a few years ago and while that’s certainly more than just an inconvenience for many it’s also an indication that the housing finance industry has returned to a more stable underwriting approach.

And when it’s morebuilding new for a rental difficult to qualify for a home loan, particularly first time home buyers who may have not yet saved up enough for a down payment and closing costs, it also means a greater demand for rentals and we’re experiencing that across the country. More so in some areas than others.

But regardless the part of the country, renters have a choice to rent an apartment or a single family home. If they choose a single family home they can select from an existing home with a few years on it or a brand new one. A brand new one that you’ve just completed as a rental.

Buyers can choose to live in an established neighborhood in an older home or move out toward the suburbs and find a brand new or nearly new property. Renters too can have the same preferences yet newly constructed rentals may be more difficult to find compared to existing property. That still doesn’t mean there isn’t a market for new rental homes it’s just that new construction is most often reserved for buyers, not renters. Recognizing this fact, have you considered building a new home for the sole purpose of keeping it as a rental and a long term hold?

You can make the determination if new construction is a good idea in the very same method as you evaluate any real estate investment, regardless of the age or condition of the property. If you build new, can you easily rent it and if so, for how much? Will rental income exceed financing and operating costs? If so, then the decision to build a new home as a rental has just been answered: yes.