Posted by gerald (tx) on January 07, 2003 at 20:42:15:
I have done this in the past with single family homes. It works best in an up market as nearly all of your profit is through appreciation. The strategy is to finance them with low down payments, then struggle to make the payments (cash flow is tough for new construction), then cash out after five years or so. The homes can usually be spruced up to look relatively new. If prices are rising, the appreciation can be substantial. What I like is that you usually have few maintenance headaches, and most problems are covered by the builder’s warranty.
After 5 years or so, sell them and repeat the process.
A couple of tips:
1- order your home when the development is just opening, as prices usually increase. It’s a common marketing technique.
2- Demand preferential investor prices. You can normally get at least an extra 3% discount that would go to realtors, however you are not going to deal thru a realtor.