Witty  Singh

Witty Singh

Sales Representative

Cityscape Real Estate Ltd., Brokerage

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(647) 274 7572
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Make Money Following The Builder!

As the real estate market cools, the profit potential of home ownership will follow the same cycle as well. Here’s a new strategy called follow the builder.

It is relatively easy to make a profit when you sell your home if the market is rising sharply like it has been in most parts of greater toronto area for the last three years. It becomes more difficult when a hot market like greater toronto area (GTA) slows down. It’s very difficult to make a profit on the sale of your home when prices are falling or market is cooling down, but it is not impossible if you follow the rules of demand and supply for your neighborhood. 

Is there a way to ensure you’ll make a profit when you sell your home when the real estate market is undergoing the most negative market conditions. In fact, I’ve seen young, energetic couples use this maneuver multiple times when they don’t even need to move from one city to another.

Follow That Builder

In many areas of the greater toronto area (GTA), there are builders who have build hundreds of houses each year within a 10 ~ 15 km radius of each other. They build entire communities or are one of four to six builders who build entire communities around big employment centers also called anchor players. This will present you a lucurative opportunity. 

New Community

Builders will typically sell first phases of communities for significantly lower prices than subsequent phases. Builders would do that because they need to cash flow to keep moving their inventory. On the other, it is harder to sell at high prices because the community typically consists of dirt lots, construction equipment and no mature trees. But an initiatie taken at this stage will result in a great profit opportunity.

The idea is to get in on the first phase of the builder invertory. You will purchase the home at a discounted price, which gives you built in equity right at the time of purchase. As the community is built up, you sell the home for a profit at a higher price. While you’re doing this, you keep tabs on the builders projects and find another location where you can do the same thing, but keep in mind there are builders who would put restrictions on resale of units as a seller you would be competing with the builder against their phase II invertory wherein you will have an edge as your house is move in ready and phase II has not even started yet.

The only real downside in these flips is you could end up with no place if builder delays on a project other than that if this is done right with an experienced realtor it will yield very good results. 

Tax Consequences

I’ve seen this work well for a number of people who have done it repeatedly. However, you need to be aware that generating profit this way can have tax consequences for consult your account before you jump into this. You need to discuss your plans including projected timing and profit potential with your tax consultant and family so that you are prepared to deal with any tax consequences. If you have any question regarding this model of investing into real estate please call Witty Singh (647) 274 7572
 

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