Step-by-Step to Preconstruction Wealth
To build your income real estate wealth in preconstruction purchase and resale, take these easy steps, starting right now:
1. Decidewhat area youwanttoinvest in. This could be locally, in the sun belt, in ski vacation areas, or even in popular overseas locations.
2. Get data on the construction activity in your area of choice. Do this by checking local Sunday newspaper ads in the Real Estate section. You can also go on the Internet and get info from real estate brokers in the area.
3. Call, write, fax, or e-mail new-construction companies. Ask for their free brochures on the properties that interest you. Study these brochures carefully, comparing prices, down payment required, location, views, nearness to shopping, religious facilities, transportation, restaurants, parks, schools, rental possibilities, and so on.
4. Pick one unit you believe has promise of strong price appreciation based on the factors listed in Item 3. Get full data on the "Ernest Money Down Payment Deposit required.
5. Estimate what you can sell your unit for at the finish of construction. You can do this by comparing earlier builder selling prices for units in the area and the sales price people paid at the finish of construction. Local real estate brokers have this info and will be glad to give it to you free. Since construction of high-rise condos normally takes about 18 months, you have this time frame to work with.
6. Negotiate with the seller for the lowest Ernest Money Deposit you can get. Why? Because this money will be in the builder's hands during construction and will not be earning interest for you. The loss of this interest will be one of your costs of doing business. So you want to keep it as low as possible to conserve your cash.
7. Make your Earnest Money Down Payment Deposit using borrowed money. Know, in advance, how you'll repay this borrowed money! DO NOT RUSH INTO A DEAL LIKE THIS WITHOUT KNOWING HOW YOU'LL REPAY YOUR LOAN. Why? Because your down payment will not be earning money for you. So the repayment funds must come from another source such as your salary, or income from other properties you own.
8. Watch your condo property every week, on a set day, such as Sunday. Do this by contacting the builder by e-mail, on the Internet, by phone, fax, or postal mail. Ask for the current price of one-bedroom ocean-view units. If your property is like many others you'll see a gradual increase in price as construction progresses. Typically, the price jump will be $5,000 1 month after construction starts. A few months later, the price will rise by $10,000, or $15,000. And by the time 12 months have passed, you may see a 25 percent, or more, rise in price.When this happens you know your investment is safe.
9. Decide when you'll sell your condo unit for a profit. Be sure to have the advice of a competent accountant before selling. Why? Because your income tax could be a lot different, depending on how long you hold the property before selling.
10. Follow the example given earlier in this article to figure your potential profit before you sell.Don't sell until you're sure you can earn the profit you've projected for your property.
11. Never sell your real estate property without the full guidance of a competent real estate attorney. YOU MUST HAVE A COMPETENT REAL ESTATE ATTORNEY EVERY STEP OF THE WAY IN YOUR SALE.
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Note: This article was sent to us by: Elena Ponasis at 03272010
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