When it comes to real estate, the question of whether to build, buy, or rent is always on people’s mindsโ2024 (and 2025) is no different. As agents and brokers, your job is to help clients navigate these options by understanding the financial and practical aspects involved. Here’s how you can guide your real estate clients effectively with empathy and insight.
The Economic Landscape of 2024
The 2024 economy has its own set of challenges and opportunities for anyone considering buying, selling, or even renting real estate (consumers and professionals alike). Interest rates have settled after a rollercoaster period, affecting both mortgages and construction loans. Inflation isn’t as unpredictable as it was in recent years but still heavily impacts the cost of building materials and property values. The general outlook is cautiously optimistic, but staying informed on market trends is important if you want to provide accurate, timely advice.
Building Property: The Custom Approach
Building from the ground up can be appealing, but it comes with its share of challenges. Here are a few tips on how to guide your clients through this option.
Why Recommend Building?
- Total Customization: For clients who want a space that fits their exact needsโwhether it’s a dream home or a unique business layoutโbuilding is the way to go. Highlight the advantage of customizing everything, from energy-efficient designs to the latest smart technology.
- Modern Features: Point out that building new allows for the inclusion of modern, sustainable, and energy-saving options that can reduce utility costs and boost long-term value.
- Growth Potential: Advise clients that building in an up-and-coming area could lead to significant appreciation over time, ultimately giving them a chance at a better payout if they choose to sell.
Points to Watch Out For
- High Upfront Costs: Be transparent about the costs of construction, as material and labor expenses can still vary.
- Time Commitment: Make sure clients know that building takes time, and delays from permits, supply issues, or weather can affect both timelines and budgets.
- Complex Financing: Explain that construction loans can be more complicated than standard mortgages and often come with higher rates.
Buying Property: The Quicker Route
Buying an existing property is often seen as a simpler option. Here’s how to present this choice to your clients.
Why Recommend Buying?
- Immediate Availability: If clients need to move in quickly, buying an established real estate property is often the best option. They’re often more ideal for families or businesses looking to settle fast.
- Established Neighborhoods: Make sure you emphasize the perks of moving into areas with decent roads, good schools, and established and well-maintained community amenities.
- Renovation Opportunities: For those who have the time and tolerance, buying an older or dated property and renovating it can be a cost-effective way to add personal touches without starting from scratch.
Potential Drawbacks
- Limited Customization: Clients should know that without renovations, they might not get their ideal layout or features.
- Aging Infrastructure: Be upfront about potential costs to update old plumbing, electrical systems, or HVAC units.
- Competitive Market: While the market isn’t as fierce as it was in 2021-2022, some areas may still see high prices or bidding wars.
Renting Property: The Flexible Option
Renting is often viewed as temporary, but for some clients, it’s the smartest move. Here’s how to frame renting as a strategic choice.
Why Recommend Renting?
- Flexibility: Renting is great for clients who need more time to be ready for a long-term commitment or who are trying out a new city or market.
- Lower Initial Costs: For those looking to keep upfront expenses low, renting can be less intimidating.
- Maintenance-Free: Remind clients that most rental agreements put maintenance responsibilities on the landlord, which can mean fewer surprise costs.
The Downsides
- No Equity Building: Make sure clients understand that renting won’t build equity and could be more expensive over time.
- Limited Control: Let clients know they won’t have much freedom to renovate or customize the space.
- Potential for Rent Increases: Even though rent prices have stabilized in some areas, many urban markets still have high rents.
Helping Clients Decide
Helping clients choose between building, buying, or renting means evaluating their financial situation, goals, and timelines. Here’s how to simplify these choices:
For Individuals
- Building: Best for clients who want a fully customized home and are ready for the time and financial commitment.
- Buying: Ideal for those looking for stability and quick availability, especially if the property has good future potential.
- Renting: Perfect for those who need flexibility or are in a transitional period, like relocating for work.
For Businesses
- Building: Great for businesses that need a tailored space and have the budget for a custom project.
- Buying: Recommend this to companies wanting a permanent base and seeing real estate as an investment.
- Renting: Suggest renting to startups or businesses testing new locations to keep costs low and remain flexible.
Wrapping It Up
As agents and brokers, staying up to date on market trends and truly understanding your client’s needs is crucial. Knowing the pros and cons of building, buying, and renting allows you to give well-rounded advice. In 2024, building offers full customization but requires significant time and money. Buying is a quicker, stable choice but might limit personalization. Renting is flexible and low-cost upfront but doesn’t build equity. Use this knowledge to empower your clients and guide them to the best decision for their situation.
