Making Money In Real Estate - New Construction
Everyone and their mother seems to assume the market has put up a permanent “out of order” sign. We all assume we won’t ever make money on real estate again. BUT, we’re all wrong! Numerous chic and upscale neighborhoods stopped building as the market began to falter, and since then, those “half-built” homes have been purchased by investors who were hoping to eventually sell the home once it was finally built for a very large profit.
When it became clear that the greater part of people who were commissioning new construction homes to be built were investors and there were not a lot of buyers, the entire market crashed. Investors lost money and many developers went out of business. They had a lot more homes in their new subdivision for sale than there were buyers. On top of that, they owed banks money for financing the subdivision. Pretty soon, banks took over these areas, which are located throughout the United States and particularly in Florida, California and Nevada. These areas were booming in the 1990s and then crashed.
There are many homes in these chic neighborhoods that are in the process of development. When the builder went bankrupt, the construction was stoped. Banks took over but have no interest in getting these properties constructed. They are simply looking to get their money back.
If you are aware of new construction or are in the trades, you can buy one of these partially constructed homes for a fraction of their cost and finish the construction yourself. You have to be careful, though, that you understand what you are getting into.
You will have to know about building policies and make sure that the home is completed in agreement with the codes. In addition, you should also be aware that some municipalities have ordinances that require that construction be completed within a specified amount of time. If the house has not met that specification, there may be fines associated with the property. A title search will allow you to discover if there are any fines that have been levied against the property from the municipality for non completion of construction.
On top of doing as much of the work on your own, you can also find labor somewhat inexpensively throughout the United States. The trades were hit hard during this recession and there are many people who are experienced in all aspects of home building that are out of work. Many small trade companies have even gone out of business. You can find cheap labor to help you finish the construction of your house.
Buying new construction is usually a way to make money in real estate during any type of market. But even in this recession, you can buy partially constructed homes, finish them and then get prepared to sell. Although you may make a small profit selling the home after construction is completed, you can make an even larger profit if you look for the long term investment and wait until the market rotates.
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