Because real estate market is cooling, the profit potential of home ownerships is cooling as well. There’s a strategy called: Follow the builder.
It can be very easy to make a profit is you sell your home when the market is rising rapidly. It becomes more difficult when a hot market slows down. When prices fall, you won’t get as much profit.
So is there a way to make sure you can make a profit when you sell your home? There is under all but the most negative market conditions.
The Follow The Builder Strategy
You can find lots of builder that build hundreds of houses that are within a fifty-mile radius of each other. They build entire communities or are one of three to five builders who build entire communities around big employment centers. This presents you with an important opportunity.
New Community
Builders usually sell first phases for a lower price. On one hand, they need to get the cash flow moving. On the other, it is harder to sell at high prices because the community typically consists of dirt lots and construction equipment. This should get you thinking about the great profit opportunity.
The idea is to get in on the first phase of the build out. You will purchase the home at a discount, which gives you built in equity. When the community is built up, you can sell the home at a higher price and make a profit. While you’re doing this, you keep tabs on the builders projects and find another location where you can do the same thing.
You’ll end up living in each house for a year or more and picking up nice profits along the way. The only disadvantage here is having to move a lot.
What Taxes Must You Pay?
You should know that there will be tax consequences. Talk with your tax professional about your plans so you’ll be prepared as to what tax consequences you have to pay for.
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