Option new constr. - build equity - sell for $ - ???
I have a realtor who is telling me that we can give a builder purchase option money (3-5K) on yet to be built property. Build equity while property is being built (with no taxes or payments), and sell at or near end of construction for profit. Other than competing with builder at time of sale, can anyone fill me in on possible problems with this scenario?
dmb
I've heard of this type of deal before, and I believe that you can make a profit here. The biggest problem that I see with it, lies with the builder himself. You would need to work with a contractor that is very ethical, or you might end up with a house no one wants.
If you agree to buy for he builds it, he may decide that it's okay to cut some corners to increase his profit in the deal.
Just my thoughts
Roger
dmb,
Just a thought,
I would plan on a
( ? % ) commission to the selling real estate Broker/Agent unless you plan on selling the property your self.
IMHO. The current builder selling price would have to be greater than the Real Estate commission you would pay to sell the property for the deal to breark even.
Ie: 6% commission on a $ 200,000 house = $ 12000.
The house you just built and paid for must increase $ 12000 to pay just the commission on sale. Then you have seller costs, etc.......?
Take a closer look, see what the builder is planning on for price increases......
Regards
Vestor
Rajwarrior & Vestor,
Thanks for the tips. Anyone have any experience with builder's setting price increases. Meaning do they increase ?% every six months, or is it based on the progress of building, etc.. Any help is good help. Thanks again.
dmb