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The Big Fish Just Got Bigger
While everyone's worrying about all these spec homes, Lennar (one of the biggest builders in America) just made a power move. They bought Rausch Coleman Homes, adding another 4,437 homes to their already massive portfolio of 73,087 homes.
But here's the kicker: Big public builders like Lennar aren't just growing - they're taking over the market. Get this:
- 2005: They built 25% of new homes
- 2019: Up to 37%
- 2023: A whopping 51%
- Soon: Could hit 60%
Why are they so confident? Because they've got three aces up their sleeve:
- Deep pockets (while smaller builders struggle to get loans to build QMI “Quick Move In”)
- Bulk buying power (they get better deals on materials - many are directly sourcing from manufactures overseas in bulk)
- Their own mortgage companies (they can offer better financing deals, Builder rate buy downs)
Of course just because they are doing it doesn’t mean everything is going sunshine and rainbows. But, public builders have got a lot smarter and more sophisticated since the last downturn - if we were really heading for trouble, would these smart money players be doubling down?
What This Means for Atlanta Investors
So while the big builders are playing chess, where does that leave us in Atlanta? Actually, in a pretty sweet spot. Here's why:
First, all these new homes coming to market? They're not your competition - they're creating opportunities. Think about it:
- New homes set the ceiling for pricing in a neighborhood
- They attract new buyers to areas (hello, appreciation!)
- And they actually help prove the market to lenders
Plus, while the big builders are focused on new construction, there's still plenty of room for investors in the existing home market. Especially when you know how to find the deals they're not looking for.
Year-End Tax Tip That Could Save You Big
Speaking of deals, here's something your CPA might not have told you about: cost segregation studies. Sounds boring, right? Until you see the numbers… Remember I am not a tax professional so consult with yours but this has been a massive help for high income earning real estate professionals.
Let's break it down with a simple example: You buy a million-dollar property (stay with me here).
The old way:
- Write off $36,364 per year
- Yawn...
The smart way (with cost segregation):
- Write off up to $180,000 in year one
- That's like finding money in your couch cushions, but way better
Here's the urgent part: The rules are changing. The write-off is 60% for 2024 but drops to 40% in 2025. So if you're sitting on properties, now's the time to look into this make sure your property is put into services before the end of the year. The cost segregation study can be done after the end of the year but before the tax filing.
Here's to smart investing, |
