A Secret To Real Estate Profits - Follow The Builder
By Raynor James, Fri Dec 9th
As the real estate market cools, the profit potential of homeownership has cooled as well. Here's a strategy called "followthe builder."
It is relatively easy to make a profit when you sell your homeif the market is rising sharply like it has been in most of thecountry for the last three years. It becomes more difficult whena hot market slows down. It's very difficult to make a profit onthe sale of your home when prices are falling.
Is there a way to be relatively sure you'll make a
profit whenyou sell your home? There is under all but the most negativemarket conditions. In fact, I've seen young, energetic couplesuse this maneuver multiple times when they don't even need tomove.
Follow That Builder
In many areas of the country, there are builders who buildhundreds of houses each year within a fifty mile radius of eachother. They build entire communities or are one of three to fivebuilders who build entire communities around big employmentcenters. This present you with an important opportunity.
New Community
Builders will typically sell first phases of communities forsignificantly less than later phases. On one hand, they need toget the cash flow moving. On the other, it is harder to sell athigh prices because the community typically consists of dirtlots and construction equipment. Put the hands together and youhave a great profit opportunity.
The idea is to get in on the first phase of the build out. Youwill purchase the home at a discount, which gives you built inequity. As the community is built up, you sell the home for aprofit at a higher price. While you're doing this, you keep tabson the builders projects and find another location where you cando the same thing.
You'll end up living in each house for a year or more andpicking up nice profits along the way. The only real downside isyou have to move repeatedly.
Tax Consequences
I've seen this work well for a number of people who have done itmore than once. However, you need to be aware that generatingprofit this way can have tax consequences. You need to discussyour plans (including projected timing and profit potential)with your tax professional so that you are prepared to deal withany tax consequences.
About the author:Raynor James is with the FSBO site -http://www.fsboamerica.org -FSBO homes For Sale By Owner. Visit our home buying page -http://www.fsboamerica.org/buyer.cfm - to view and buy homes,houses, condos, land and real estate.
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