Buying Power
A new home that hits the market with a price tag of $300,000 requires financing of about $235,000 to build, depending on the region. The remaining $65,000 is the profit split among the investors and the builder. If you could turn $235,000 into $270,000 in 9 months (typical time from first permit application to "Home for Sale"), you'd be realizing a return rate of nearly 19% annually.
Don't have $235,000 sitting in the bank or your IRA and 401k combined? One of the great benefits of pre-construction investments is that multiple investors can join funds and realize the same rate of return. As your money grows exponentially with each investment, you'll soon find yourself able to invest in even larger projects.
More money to invest equals more access to pre-public releases of land deals, investments in high-end exclusive projects with an even greater profit margin and the power to get in at the ground level of emerging markets.
Choices Beyond Homes
How many "fix and flip" shows have you seen that start an office building or resort hotel? How many retirement condominium complexes? There are plenty of these types of buildings that need repair and may be able to turn a profit, but the typical fix and flipper must find the funding. Now that you know you can join your funds with others, you should also understand that the options don't end at homes in Anywhere, USA.
What Hawaii was thirty years ago, some say the coast of Mexico is today - a destination where your investment can see unbelievable returns in just a few short years. There will always be some new great vacation hot spot in the world that needs shopping centers, marinas, hotel resorts and, of course, homes to house the resident population. You can help fund these types of projects before construction begins and see your profits roll in as tourists flock.
Funding for the Future
Do you have a friend or family member in the construction business looking for funding for a custom home project? You can invest your retirement funds in the project. Profits are returned to the IRA LLC tax-deferred, where you can reinvest the profits and watch them grow even more.
