Following The Builder (Real Estate)

by Robert Trivett on February 9, 2012

When the real estate market is cooling, it’s only natural that home ownership profit potential will also decrease. Well here’s a certain strategy called “follow the builder”.

Selling your home when the market is rising quickly will enable you to make a profit easily. It will be harder when the market will slow 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.

Follow That Builder

There are lots of builders that build numerous houses within 50 miles of each other. The builders can build whole communities or can be among three to five builders who build communities around large employment centers. You should jump at an opportunity like this.

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. The prices will be low now, so that means you can build equity. When the community is built up, you can sell the home at a higher price and make a profit. So you should take note of the builders’ projects so you can do this again.

You’ll end up living in each house for a year or more and picking up nice profits along the way. The only real downside is you have to move repeatedly.

Tax Consequences

Of course, tax consequences are part of making profits this way. You need to discuss your plans (including projected timing and profit potential) with your tax professional so that you are prepared to deal with any tax consequences.

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