Pre-Construction Flipping (Chicago)
JS, I have the same question.
How does this work in IL? Cook county? I want to limit my exposure so I was thinking $500 initial, 2% when 50% complete, 75% complete 1% and close when building is 90 complete and sold. The hope is by 50% ot 75% complete, I can flip it. A friend of mine actually closes the deal first and puts it on the market the next day.
We really need a POV from the seasoned REI.
Jackie
First, you have to make sure the builder does not have an "anti-flipping" clause in his contract. I have seen clauses in new-construction contracts that prohibited flipping within six months to one year, or, that allowed a flip but gave the builder the right to all profit within the first year.
In one pre-construction market I am working, the builders are asking for $2500 to $5000 as a fully refundable reservation fee, and 10% down when the contract goes hard. No assignment permitted, and anti-flipping clauses included in contract.
thanks.....The good thing is that sign went up yesterday, the model unit is 4 - 6 months AWAY. The agent was not given any rules about earnest, deposits, closing...so I figure I with take advantage of that. Plus, I am acting like I want to move in but do not want to move in with noise and strange men walking around all the time.
I will check for these clauses.