Any advice on how to position a sale of a new home in a community that is still building. I got in on the 1st phase and I will most likely be the 1st resale in the community. I plan on selling a new SF in MD early next year in a highly visible and desired community. My equity will be up about $150K buy the time I sell. How much off the current sales price should I list? If any. Should I offer closing help?
Are you putting down 150K to get equity of 150K? How do you know the home will be worth more next year? Are you getting in low now, or just at market value? Are others doing the same thing in that community? You know if you have ten other investors, and they all do the same thing, that will push the values down, usually. Never count on previous gains as future results. If you are, you are gambling not investing.
The house is currently up 60K. The builders have been increasing the price by 20K every 2 months. So I’m estimating my home will be worth 150K more than what I purchased it for. Considering the down payment requirements I’m sure there are not many if any other investors 20K down + 33% options due when they break ground. This house was going to be my family’s next home but we changed our mind. And no there isn’t any investor clauses in the contract.
Is this a low income area? I only ask because 20k down is nothing, especially for an investor. In my area, and in fact, all around the west coast, 20k down on a home represents 1-5% down and there are plenty of people (not just investors) who can put 20k down on a home. I would think the east coast is full of the same. Typically it is only middle America that a down like 20k would scare off people.
Also the 33% on options is very good IMHO. Many builders here want more to all. I am buying a new home soon and the options are 50% up front.
Not sure what area you are in but if the builder experiences slowed sales, you could see a knock-back on price. Usually means the price went up too fast so they will do a rollback OR offer free options.
WOW…interesting!! I thought 50K for dp & options was a lot. It’s in PG County MD which is an underserved community of Washingto DC Metro area… aka “high minority population”. This area is booming this is the 1st gated golf course community in PG county and the only one of it’s kind 30 Miles within DC. My builder is being conservative with the increased pricing. There are other builders in the community (6 total) who are up $100K +in 7 months…WCI for instance is who is one of the countries top luxury builders is up $160K in 7 months vs. my builder who is up 60K.
We just did the same thing in Florida. We bought preconstruction, 1st phase and by the time they finished building it was up about 55K. We sold our houses right away. The up side is we got some cash to re-invest, the down side is because we did not hold the property for 12 months we are paying taxes as regular income. OUCH. If you can hold and rent for 1 year, the value may keep increasing then you can sell (I suggest a 1031 exchange so you can reinvest all the profits). Good luck.
What does AKA High Minority population have to do with anything?
It means the community is underserved because of it’s population…The area has an average HHI of over $100,000. The county ranks in the top 5% of all counties in the country for income…yet the comminity has little of what you would expect to see in communities with that type of desposiable income.
Strange, becuase it’s in the “Peoples’ Republic of Maryland”…land of the Tax and Spend – oh, they must be sending all of that county tax money to support FedEx Field and the “Deadskins”…
I am actually in Maryland. I understand the concept just wanted an explanation. I actually do investing in MD, DC, and VA.