Buying A Property At Pre-construction Price And Selling Before Settlement
I've heard that this can be quite profitable, as the property can appreciate significantly in the 12-18 months it takes to build, and then you only have to pay settlement costs without incurring any mortgage expense. Does anyone have anything to share positively or negatively about this theory? Thanks!
My buddy had a house built for him out at 66 and 15 past Manassas, VA. We discussed how many people want to immediately move-in. I keep thinking about it... haven't seen any roadblocks yet. Property taxes (when and how much) seem to be an important variable. Getting the sales proce locked in ASAP is best.
I make a good deal of money investing in preconstruction condos. But beware - this is a speculative form of investment. You are counting on appreciation.
Do not buy unless you are prepared to close. There are many investors doing this and you must buy very wisely.
Double closings with out a seasoning requirement are common here in Florida - but you may not have such an easy time elsewhere.
Know your exit strategy..
Gregg
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Gregg Fous
[ Edited by GFous on Date 04/23/2004 ]
Also see this thread:
http://www.thecreativeinvestor.com/ViewTopic24840-33.html
I am in the process of doing this right now. I'll let you know how it turns out. We bought in the first phase of new construction. The same house is listed today for $50,000 more than what we paid. Wish me luck in the resale! It's going on the market this week.
There are also considerations such as whether or not the builder allows you to assign your contract, if they require a certain duration of owner occupancy, etc. Here in SoCal, many times, investors are shut out because the builder won't let you buy w/o 12 mos. of living in the house. I agree, do your homework!
ditto to all that was said before. More than likely the builder will not allow you to double close or assign your contract. You'll have to pay closing costs for the loan but with 100% financing these could be your only costs involved. I've been doing this in Vegas at it has been lucrative. However, the builders are throwing up more hurdles to this type of investing, i.e. higher earnest deposits, allowing no investor or second-home buyers, insistance on using their lender, coercion, lying, etc. Great way to invest though.