QUOTE (ThomasBeyer @ Feb 22 2010, 02:09 PM) in the right market that may make sense .. if the spread is wide enough.
Consider that it is harder to finance and can back-fire if re-sale market tanks or the envisioned gap is lower.
Also consider holding costs between taking possession and selling: taxes, condo fees, mortgage interest .. plus sales cost i.e. marketing + realtor fees
The risk / reward has to be adequate.
If you can buy "pre-sale" for $300,000 and the market allows $400,000 then even after those fees it may make sense.
Highly speculative .. high risk .. but worth it in the right circumstances.
Also consider that most developers will not only keep your deposit if you don`t close but also might sue you for damages if the re-sale market is weaker than expected.
What specific market and specific price point do you have in mind ?? .. as most strategies work "in principle" but fail "on specifics" !
Also builder contracts are heavily weighted in their favour. You can pay up to 8% in closing costs that would erode all your equity Bob Aaron, a lawyer in toronto, wrote a column that a developer put in their contract that the had the right to collect money on fictitious fees
see
here