Does This Sound Legit / If So Is It A Good Deal?

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I have been corresponding with a guy in my town who works for a builder to get investors for the homes the guy builds: He wrote:
My name is ____and I work with _______Fine Homes.
We are a custom home builder in the DFW area of North Texas.

We build custom spec homes for investors. We contract with investors to build the home at 80% of appraised value. We qualify our investors for an interim construction loan at 0 down. We roll points and closing costs into the loan. At worst, based on an individual credit rating, our investors may have to put 5% down.

When the homes sale, Investors have generally seen a 21-23% Return on their Investment. To date; In our best case scenario, an investor put 0 down and made a profit of $164,000 dollars on one transaction. Our worst case scenario to date an investor took a low offer and made $12,360.

In the last two years we have built over 200 homes for our investors. In 2005 we will build over 400 homes and currently have 142 homes under construction. We provide our investors with a pre-construction marketing package, post construction marketing package, and an exit strategy if the home does not sell in less than 12 months. Our investors have total control of the process. Each investor is given updates with digital pictures on a bi-weekly basis. Individaul investors also control the money and release the funds to the builder as the home is being constructed.
On average most of our investors make between $45-$50,000 per transaction.

We are building in communities such as Thomas Crossing in Burleson, Twin Creeks in Mansfield, Buffalo Creek in Rockwall, Split Rail in Aledo, Lakes of Steeplechase in Prosper, and TPC Craig Ranch in McKinney.
We target communities that are in the hottest growth areas of the metroplex, are part of a masterplanned or golf course community, and are communities that have no production builders (i.e. KB, Choice, Fox and Jacob)

We are also establishing a business referral network that we will pay you a flat fee commission of $2,000 for any referral you send us that signs a contract to build a spec home. Afteryou send 10 investors who contract to build homes with us the commission increases to $3,000 per referral. One referral a month could net you $30,000 by the end of the year. This is not a one time commission. Every time an investor contracts to build a home that is one of your referrals you will receive a check. All commissions are paid up front.
The day the investor signs the contract is the day we cut the check.

Investors
No more driving through neighborhoods, no more searching newspaper ads, no more countless offers, no more haggling negotiations, no more time consuming rehabs, no more costly repairs.
We build the home, We market the Home, We sell the Home.
You make the money, over and over and over again.

If you would like to discuss these opportunities further please contact me at;
_________

Comments(17)

  • roboxking27th February, 2005

    In most states you need a license to be paid a commission. A builder who would violate that law raises an eyebrow.

  • roboxking27th February, 2005

    If the money is deposited with a title company of your choice and you have a valid and enforcable contract listing the material to be used, then if it makes sense to you then it may be a good deal.

  • InActive_Account1st March, 2005

    Hmmm... Check this company out at the BBB... like the last post says... Ask for references as well.

  • makmak2nd March, 2005

    Premier,
    I am incorporated, but why is it best to sell after 1 year and 1 day? Please explain. Thanks again for the replies guys. Keep them coming!! I need all the advice I can get from you all.

  • rewardrisk2nd March, 2005

    If there is a large profit to be made, why does the builder want investors to buy, sell and make that profit?

    The builder could make more by just selling directly to the end user.

  • PremierNationalInvestors3rd March, 2005

    Makmak, first you want to hold for at least a year so when you sell you only pay 15% tax on the profit. Secondly builders are not in the business of selling houses. They are there to do a job and get paid for it now. They would have their own money vested in the project and then after 6-10 months have to market and sell it. I don’t know of any “private” builders that have that many assets to do more than a couple a year. There is no income during the construction period. As for the construction loans, fannie mae and freddie mac only allow a maximum of 4 residential properties in your portfolio at any time. There are un-conventional loans that don’t care how many you have. So he is full of it when he says he can only do 4 a year. Basically, they put packages together for other people and that’s how they are obtaining their business. Because most people don’t know that they can do it themselves very easily.

    Maddog56
    I can tell you that the “fundamental forces” in Florida are outstanding! It will be the next California. There are so many places you can lookup economic, population growth etc. Florida will not be “tanking” anytime soon, actually I believe you will see between 15-25% appreciation the next few years. That’s my opinion though. The good thing about new construction is that you have a built in appreciation of usual 20% if you know what you are doing and have good contractors. So with that said, holding a property for a year with a modest appreciation rate of 20% this next year you can see why Florida is Booming! By the way make sure you find out how long it takes to get the permits. I am buying 2 homes in Lee County and it is taking 5 months :-o

  • robcarfagno3rd March, 2005

    Just be sure to perform your due diligence. This sounds like a good opportunity, but if they can not provide names for at least their last 5 - 10 investors...I would be cautious. They may something to hide.

    Much Success!
    Rob C. from Baltimore

  • InActive_Account16th March, 2005

    Any updates on this offer?

  • InActive_Account16th March, 2005

    hey makmak, I live 15 minutes away from you and I think I know the builder who is doing this type of investment. I would like to discuss it with you. I could tell you what I know about this builder and tell you what I have heard about them.

  • makmak16th March, 2005

    I went to meet with the company last Thursday and I was impressed with them all. They have a design center and basically a central hub that everyone from the in-house mortgage team to architects design gals, realtors and builders work out of. I met many of them including the CEO. He is young but his dad has been a big name in development for years,and he has probably never flown commercial in his life. I found this out through the realtor who works for him, the CEO did not toot his own horn as he could have, but rather, seemed really genuine, but all business. They were very upfront with me about everything and even physically showed me about 4 homes that they had recently completed. They even went through exit stradegies that are available if worst case scenarios happen. I feel much more comfortable with the whole thing after seeing that it was not some faceless internet scamster out to rip me off one more time. I plan to go forward, and pray the market for new homes stays strong or that no 9-11 occur and that I am not saddled with a 500 K home. I will let you all know how it turns out. Pray for me everyone!!!

    Quote:
    On 2005-03-16 20:57, sentanh wrote:
    Any updates on this offer?
    [ Edited by makmak on Date 03/16/2005 ]

  • makmak16th March, 2005

    senatorcbp2


    How can I write you? I HOPE THERE IS NOT BAD NEWS AWAITING ME!! :-(

  • InActive_Account17th March, 2005

    Well if it is Paramount Fine Homes that I am thinking of I havent heard anything that is out of the ordinary. Just remember the risk that were already told to you such as if the house doesnt sell youre stuck with it. etc. Even if the company isnt Paramount I would just look into it further, but hell give me the guys name and I will check it out. If it works, I will call let you know and then you can do it also. The guy wont care if you give out his name because he is salesman trying to get as many people to do this as he can. But if you want I can give you my cell # so you can call me.

  • funlove1418th March, 2005

    PremierNationalInvestors -

    Are you buying preconstruction, the way it was explained in this email, in Lee County? If so, do you mind me asking what builder? I live in Lee County and am just starting in REI, looking at all the different investing angles. Serious newbie gaining knowledge. Thanks!
    [addsig]

  • makmak18th March, 2005

    I only know of this builder in the working in the Dallas, Texas area. They are custom builders and have been around for 3 years.

    Quote:
    On 2005-03-18 09:24, funlove14 wrote:
    PremierNationalInvestors -

    Are you buying preconstruction, the way it was explained in this email, in Lee County? If so, do you mind me asking what builder? I live in Lee County and am just starting in REI, looking at all the different investing angles. Serious newbie gaining knowledge. Thanks!

  • dlitedan28th March, 2005

    I use a spec home builder like this, here are some things to ask. Will you have to make payments on the loan while it is being built? How long does it take them to build and is there a guranteed time frame? How long on average do these homes sit on the market until they are sold? All the answers to these questions should be taken into account for how much money you will actually make.

  • wyldrush4th April, 2005

    PremierNationalInvestors: I am getting ready to do pre-construction in SW FL also. My only regret is I waited 2yrs to long to cash in on the deals. Are you investing in Lehigh Acres (definitely not investor friendly town anymore) or elsewhere. I am getting ready to invest in Port Charlotte area with a company doing SPEC homes (Panel homes are the future) . They are doing it for $1500 out of pocket, 500 on land, 500 on house and 500 for builders insurance. Takes 8 ,months max to complete about 2months of it is waiting on the permits. Wondering what company your going with and are they creative on making a low downpayment.

  • olandacurry4th April, 2005

    Makmak, I havve been seeing the same kind of promotions. let me know what you find out with ****Must participate a while before posting URL's*** would be very interested in doing it also. You can email me at ****Must participate a while before posting URL's***urry@us.army.mil.Thanks!

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