Because real estate market is cooling, the profit potential of home ownerships is cooling as well. Here’s a 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 of the country for the last three years. It becomes more difficult when a hot market slows down. You won’t be able to make a great profit if home prices are falling.

Can there be a guarantee that you’ll make money when you sell your home? Actually, there is, but it’s under the most negative market conditions.

Follow That Builder

You can find lots of builder that build hundreds of houses that are within a fifty-mile radius of each other. They can build entire communities, or be among a group of builders that build communities around large employment centers. Now this is a great opportunity for you.

New Communities

In a community, builders will sell the first phases cheaper than the later phases. On one hand, they want and need the cash flow to move. On the other hand, it’ll be harder to sell at high prices because the community isn’t completed yet. This can be a great profit opportunity for you.

You have to get in on the first phase of the build out. Because prices are very low when you buy, you can build equity. 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.

This means you’ll live in each house for a year or so and make profits along the way. The moving is the only downside here.

The Tax Consequences

Of course, tax consequences are part of making profits this way. You need to discuss your plans (including projected timing and profit potential) with your tax professional so that you are prepared to deal with any tax consequences.

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