BRRRR vs. New Construction: Which Makes More Money in 2026 (I Did the Math)

**Dave Meyer** (0:00)
Should you buy a fixer-upper as an investment property or a brand new house? For years, we'd never even ask this question. Buying a property, fixing it up to increase its value, and renting it out was the obvious choice. But the market has changed, and renting out a newly built home is more appealing than it's ever been before. We're seeing dropping prices, mortgage rate buy downs, and new properties don't come with maintenance worries. It is an outside the box option, but savvy investors are taking notice. But of course, renovations with the BRRRR method can still be one of the most powerful scaling tools available to investors.
So which one should you pick? At the end of the day, it really just all comes down to the math. So today in the show, I'm going to analyze two deals in the exact same market. One new construction, one BRRRR deal, and we're going to put them head to head to see what's a better investment in 2026
New construction or value add? The answer might surprise you.
Hey, everyone, it's Dave. Welcome to the BiggerPockets Podcast. We got a fun show today. I am really excited about it. We're actually just going to compare two different types of investments and decide which is the best one in 2026
We're going to first look at a classic kind of investment, a value add deal, kind of like a burr where you renovate an existing home, rent it out, build some equity. It's a classic. We're going to compare that to buying new construction, which may not be a strategy you've thought of before. But I think as we go through this episode, you'll see that the pros and cons and the trade offs of each strategy really might surprise you. If you had asked me before COVID, should I go out and buy new construction? I would have said no in one second. I wouldn't have even really thought about it. As an investor myself, it never crossed my mind for at least the first 12 years or so of my investing career, because buying a property that needed some repairs, even just a cosmetic update, was just a no-brainer way to build equity in your portfolio. That was basically the whole job of being an investor, was doing the burr over and over and over again. But there are things in the market going on right now that make it intriguing to buy new construction. And there are four things you should know about why investors should consider new construction right now. The first one is that builders are sitting on a ton of inventory that they've already built and haven't sold yet. All of this inventory means that builders are willing to cut deals, because builders just have a different business model than a home seller. If a regular homeowner doesn't like their price, they might just choose not to sell.
But the way a builder's business model works is they have to move this inventory, otherwise, they're just paying for it indefinitely, and that doesn't work for them. And so they're offering all sorts of incentives to get these homes off their books. These incentives come in the form of rate buy downs, which we're going to talk about a lot right now. A lot of them are advertising 5.5% mortgage rates on their websites right now. They're also doing seller concessions, which can reduce the cost of your closing costs, for example. Or you can negotiate better finishes in their home. And sometimes they're even willing to drop the price. The second thing is, and listen to this, because it's kind of crazy, to go out and buy a newly built home right now is cheaper than buying an existing home on average across the United States. There's actually an analysis that the National Association of Home Builders did, and they found that the median home price for a newly built home was $1,400 less than an existing home. Now $1,400 grand scheme of things, not that big of a deal, but this is not normal. Usually, new construction, to go out and buy a new home, is a lot more expensive than going out and buying the existing home. But the opposite is true right now, which is exactly what makes this so interesting to look at. So those are two things that are sort of happening right now in 2026
Then on top of that, there are some benefits that are always there. A newly built home is going to have lower maintenance and repair costs, especially in early years, which allows you to build up reserves and save up for your next purchase. That's a great thing for your portfolio. And then the second thing that is not true in every situation, but in many situations, new construction is going to have higher renter demand. People will be attracted to a new home with modern amenities more than a dated home. So that means, one, you may have lower vacancies, but two, you can probably charge higher rent.