This is an article I found of interest to anyone who is a Real Estate Investor. Has anyone else seen this happen in your area of the country? ???
In Central Florida’s hot and wild real-estate market, where buyers outnumber homes and prices blasted through the roof long ago, people are going to extremes to snag a new house.
*Full Artice at:
http://www.rismedia.com/index.php/article/articleview/10429/1/1/
Most of SW FL has gone to the lottery system, and what a joke. The develper can now see the demand for his property and set the price accordingly, how do these investors think they are actaully getting in at a respectable price. What is even more ammusing is that there is a group of inside investors that float all the contracts before they ever get to the “pre-contruction” price that is sold off to these lottery holders that they will never now about. We all now in the world of investing there are some real dishonest foks and developers out there, that are only hurting themselves in the long run. While this will hold up now, it is those investors that are the true builders of these projects and when they realize they have been taken advatage of, they will never invest again with that developer and ultimatley hurts us all.
There is nothing wrong with being a inside investor and getting in on these groups as it is a rarity, so if you get in do your homework and keep your nose clean. For those reading this and thinking they are gettign some great deal because they hold a lottery number well do some more homework, and be sure you are investing with a honest and upfront developer.
Best
It happened in Vegas for a bit. Now everything is “Interest Lists”. They go in line now so first come, first served. Problem is you MUST use their lender. If you don’t want to, say bye-bye to list and your opportunity to buy the property.
i assume by using their lenders the developer is getting a kick back on all the contract don through them…can you say monopoly.
yea lol. You KNOW there is something in it for them. I don’t think that should be legal.
It is creating a monopoly for the lender.
I was wondering, has anyone run into a situation in a new home project where the builder will not sell to an investor and you must occupy the home for a year at least before you can sell it?
Is that legal and how can a builder enforce that?
Is there anyway to work around this as an investor ???
Yea. I have seen that here. No investors.
Basically what probably happens is this:
Builder lets you know that they don’t sell to investors.
You must use their lender to buy the home because you are buying through the “interest list”, “vip list”, etc.
The lender they use does not do investor loans on these properties.
So in essence, they are just informing you that the lender they choose won’t do investor loans, thus no investors allowed.
They do this because renters bring down a neighborhood. If you own a home in a good/prime neighborhood, the last thing you want to see is renters, especially many of them.
Have you found anyway around it?
Just wondering, because I have a lead on some HOT properties on the Big Island of Hawaii I wanted to buy 2 or 3 of and Resale, but the builder says no investors, no renting or resale for a year…
any thoughts or thats just the way it is… ???
Well, if it is 1 year and the property is indeed hot, you could live in it for a year or just eat 1 years payments.
Or find a friend or relative that would like to live there. Make a deal, in writing, where the first years rent is your PITI only. It should be a super deal for them and you get the property afterall.
I am no expert so ask around before following my advice 
Yes, I’d like to know more about owner occupied for 1 year as well. I’m thinking about trying to buy a new home in the near future and wondered about that.
How would they know I was renting it out?
Wow, must be a lot of dumb buyers down their in Florida. I could never be in a lottery to win the opportunity to buy an overprise apartment (condo) or a track home. Gee Wiz people get a grip and reality check please!
I now hear they are doing the same thing in Vegas now :o
They are! The Cosmo, mailed me a application to take part in there lottery selection for pre-construcion. The funny thing is, a dear friend of mine has had a assignable contract on this for 6 months, and these are the contracts that are being lotteried off at $150 sq. ft. more than he purchased at…i think the lottery thing will come back on some of these developers who are sticking it to “investors”. A littel digging around and the truth always surfaces…
Best, All
Builders here in northern, Ca are also having lotteries, mostly in the Sacramento area.
In my opinion there is nothing wrong with buying a house in a lottery. It shows the investor that the interest is there for the homes. Buy in the early phases and the price is sure to increase in subsequent phases. Only problem is the 1 year owner occupancy contingency. Does anyone know the specifics on this one year owner occupancy deal? What would happen to the investor if he sold inside of that year?
Yes, the builder will buy the house back from you and say bye-bye.
That was the deal on the Hawaii one I just looked at.
They are getting smart - The developers 8)
There are still some developers that are investor freindly, and i beleive there will be a trend back to this. If they continue to stiff arm us (we are the money backers) we will stop buying their inventories.
We (Vegas) did lottos last year. Now it is all interest lists basically. Straight forward. You put your name down and they call you in order. Some places just ask you to fill out your name and addy. Others want to pre-qual you before adding you. Some of the new condos are doing earnest money to get on list.
I just went to a builder in a new community going up and their interest list is already at a 6+ month wait. Pretty funny since they have not even built 1 model yet lol.
Lots of the new homes are being built on lots that are .05 to .065. Stack n Pack.
it’s not happening in orange county, calif. year to year apprieciation rates are down to single digits.the market is still good but not what it was like the last couple of years.
some builders (irvine company and others) have been trying to impose 1 year resale restrictions. are they enforceable if push comes to shove??? who knows.
I just found a development going up with a lotto system. For x amount of units. The units are selling for 600k but if you win the lotto you can get in for 400k but have to live in the unit for 5 years. That’s not a bad deal I don’t think I’m going to try to get in and just rent out my current home.
Buying a New home in the Sacramento Area is a hassel. They don’t call it a lottery but in fact that is what is happening. From a loan agent point of view, we can pre qualify the client but they have to qualified by the developer’s company also. then the pre qualified buyer must show
at least $8,000 in the bank to get on the list of qualfied buyers.
They cannot have a home that they need to sell in order to purchase their NEW home. Even so the waiting lists at most of the new home developments that I checked are in the 400+.
The homes must be owner occupied no speculators allowed.