The Contract between a Buyer and the Builder – Things to Keep in Mind
How do you secure your real estate investment to make sure you're getting what you pay for? What is the procedure you will have to follow? Who signs what contract, when, and what are going to be the terms? What is the amount you pay as the earnest money deposit? And what on earth is escrow?! There are lots of questions about safeguarding your real estate investment and even more now, during the pandemic. Let me try and answer a few of those.
Buying a rental home – what to expect.
One of the things that concerns a lot of real estate investors is this: how do I ensure that I'm going to get the home I'm buying? The sequence of events will unfold a little like this. You will work with a property broker to identify the home that you want to buy. There are a lot of boxes you probably want ticked when you make that choice so make it wisely.
After this, you will receive a contract where you are identified as the buyer with the builder as the seller. The document that you and the builder sign will identify the house and set out all the terms and conditions of the contract. At this point you will make payment of an amount as and by way of earnest money deposit. This amount will remain in escrow on your behalf while the house is being built. This could be $2000 or $3000 or $5000 or in that range. If you’d like to know about the process in more detail, you may want to check out my book on Amazon: Remote Control Retirement Riches: How to Change Your Future with Rental Homes.
How things have changed during the pandemic.
As I have been saying in my podcasts and some of my other articles, there have been some major supply chain problems in the real estate market during the COVID-19 pandemic. Lumber, labor, and raw material procurement – all of these have been problems resulting in significant delays. Right now, demand is actually higher than supply of houses, and buyers are having to get on waiting lists and cool their heels for some months before investing. However, waiting a few months to make the right investment is immaterial. It doesn’t impact the long term investment you are about to make.Because of all this, some of the buying-selling configurations have also changed. While investors will still follow the sequence of signing a contract and then paying the earnest money into escrow to secure a property, builders /brokers have introduced some variations. This is something that I am going to be addressing soon at our expo event.
To know more about real estate investing, just reach out to us at icgre.com or get on to our mailing list to get useful updates. We are happy to help clarify any doubts or questions you may have. Remember a real estate investment is the best way to create future wealth for yourself and your family. It can be a life-changing decision that will start to generate a passive income for you right away – your “remote control riches!”