New Construction Requirements for Real Estate Investors:- Whether it’s in regard to pleasing your neighbors or pleasing your bank, once you prepare to build a new investment property, you want to make certain in advance that what you’re building conforms to code, local restrictions and lender’s guidelines. 

building to code

If you’re going to flip the property, your buyer will most often require a home loan and the lender wants to lender on a conforming property, one that “fits in” with the others. That means building a home similar to other properties in the area. An extreme example might be building a metal geodesic dome in the middle of neighborhood populated with two-story, three bedroom brick homes.

Your initial considerations are making sure your proposed property meets local ordinances. For example, a city will have a limit on how high the structure may be, how many stories and the materials used to build the home. There are fire code considerations as well as proper design and installation of electrical and plumbing systems.

The next step may require building according to any restrictions issued by a homeowner’s association in the area where you intend to build. Such restrictions are listed in the association’s “covenants, conditions and restrictions.” These established guidelines will provide additional information on what is allowable and what is not. CC&R’s can require a closed garage in lieu of a car port but limit three car garages for instance.

And finally you’ll need to make sure the property conforms to standard lending guidelines. When the home is financed either by you or your buyers, an appraisal will be ordered. The appraisal will state that the property is similar in use, size and appearance of similar properties that have sold within the previous 12 months.

That might sound like a mouthful and a lot of trouble but every newly built home must go through a similar process. Take advantage of the resources around you that can provide you with all the building restrictions you need to know about including city hall, your builder and your bank.