Please advise if this investment strategy will work?

[C.Smith [EquityScout.com]]

Note: Buying pre-construction deals for resale is not real estate investing. It's real estate speculation.

Not that there's anything wrong with that (as they say on Seinfeld) but bear in mind that the juice in these deasl is based entirely on whether or not the market appreciates; something you have no control over whatsoever.

You can make money timing the market, but be aware that as a speculator you're taking a special kind of risk, and make sure you have the stomach for it.

[fc902]

to offset the softening demand for SFR's and especially condo's if you're outside of Manhattan, look into income producing properties or multi-unit properties.
As an investor, rents increase exponentially in units vs. sfr's

[BrandonSternfield]

First, I'd like to say I agree with 99.99999% of what was written before this post

My firm recently started to work on preconstruction listings.

The escrow is absolutely correct. It's not a true 100% failsafe, but it is a nice one still.

The flipping market is in a decline. Right now as everyone knows, people are staying in their current homes. If you buy your preconstruction property in a good area (down town new york, down town Miami or fort Lauderdale) that has good business and home communities, not to mention families there (kids grow up, some stay in the area, but they need a place to live at...) it's a good chance that by the time it's built, you've already made money.

As an investor, if you get into preconstruction early enough, you can even rent your condo (I highly recommend the hotel condos) below what the developer sells them brand new, AND offer incentives, and still make out like a bandit.

The South Florida, and Orlando area real estate, are still going strong. Not as high as a few months ago, but everything is still increasing, just at a slower pace.

That's my $0.03, because two cents wouldn't be able to afford all those half paragraphs

[petros]

Hi,

The proposed stategy may work depending on what price you will buy the house or condo and what price you will be able to get from the market one year later when the project will be completed and you will attempt to sell it. You need to understand very well with the help of an expert what is the market value of the under construction project as a completed project. If you decide to buy while under construction make sure you get a reasonable discount on its market value (as completed) at the time of your purchase. Don't buy at its market value assuming that the value will rise within a year, because it may not rise. It may even decline. According to the latest National Association of Realtors data, median housing sales prices in February 2007 declined from their February 2006 levels. Of course that is not the case in every market. I think unless you find a property you can buy at a good discount from today's market value, or you find a property in a rapidly rising market, this strategy may prove risky or at best deliver low return in today's housing market environment.

Petros

[Saodavi]

Note: Buying pre-construction deals for resale is not real estate investing. It's real estate speculation.

Not that there's anything wrong with that (as they say on Seinfeld) but bear in mind that the juice in these deasl is based entirely on whether or not the market appreciates; something you have no control over whatsoever.

You can make money timing the market, but be aware that as a speculator you're taking a special kind of risk, and make sure you have the stomach for it.

I came in here to say exactly that.

It also sounds like you're looking for some "easy" money. There's not much of that in this business ... especially since the market has largely corrected itself. Most of the investment money made in this business is from:

1. buy a junker + rehab + sell
2. buy a property + rent out for cashflow and/or equity build up
3. buy land + build something on it + sell/rent it
4. buy apartments + convert them to condos + sell them

Investing means you have a formula, a business plan, and some other factors that you control to create more value out of something than was originally there. Investors can make money regardless of the market and it's external factors. It's also strongly correlated with WORK which has been a time-proven technique for getting MONEY.

Speculation means you are depending largely on things you can't control like appreciation or market timing. If you're into this, you also might like day-trading. This sounds like it comes from those Carlton Cheats tapes on how to "make money fast in real estate using 'other peoples money' (OPM)".

Just my 2%.