My husband and I recently started investing in real estate. We purchased 2 condos, just sold one and the other one is rented out. We have heard about investing in new houses. Houses that builders will be developing. We were wondering how to go abouts approaching these investments. Should we work with a realtor? Should we work directly with the builder? I have been told that realtors can get good deals with builders if they bring lots of buyers. We live in Northern Virginia and would love to invest here or even in Maryland. Your advice would be greatly appreciated.
I work for a very large home builder and really know the ins and outs of this business and here is my advice to you: The only way to make money buying new homes is to buy into what is know in the builders world as “Phase 1” or “VIP”
Basically what happens is that the builder will release X amount of homes in phase I at a certain price level - basically testing the market. Once those are sold out the builder will raise prices and start the next phase of selling. If you get in on phase 1 or in the VIP selling phase by the time your house is built and if demand is good you could see a very nice profit coming to you if you decide to sell. You can still make a profit if you buy into the latter phases but you will have to hold onto the house much longer. Also note that most builders require 10% down deposit just to start the building.
You can use a realtor but some builders will not pay comissions to realtors if they have their own in house selling staff. I currently deal with many large builders and developers as well as know great agents who can help you out.
I know it cant advertise here but I do know this industry very well.
Hope this helps
Seth
www.sdcproperties.com