IRA pre-construction play
Tampa-based real estate IRA services firm Independent Executive Management (IEM) has announced a program for single-family pre-construction which can provide returns of nearly 500% on an investment of $7,500.
IEM has partnered with First Home Builders and the Florida Gulf Coast Group to provide this offer. Investors can use retirement or non-retirement funds to participate in this program.
"An investor comes to us with $7,500 and for that amount, we arrange to have a home built in either Cape Coral or Lehigh Acres. One of our affiliates then provides a tenant who enters into a lease-to-buy agreement for that home. The amount the tenant pays each month toward the lease covers mortgage payments, taxes and management fees -- so there's no additional outlay for the investor."
"At the end of 24 months, the tenant is obligated to buy the property for a set price. When the tenant buys the property, the investor earns a gross return of 14% of the sales price of the home. Assuming the sale price is $250,000 plus closing costs, the investor receives $35,000 for a total return of 466% on the original investment."
Interesting timing for this program to surface soon after it was announced that the FDIC has ordered First Community Bank of Southwest Florida to stop making construction loans. First Community had been one of the largest pre-construction originators in SW Florida and a major financer for First Homes. Looks to me like First Homes is is leaving no stone unturned to keep the new home locomotive running. Hopefully, those pondering an investment in this program will not put future retirement funds in play without truly understanding all the risks.
Florida Pre-Construction Program Promises Spectacular Returns [Marketwire]