Strategies for saving on a new build

[Cody Woods]

I have been saving aggressively for my next real estate investment and this will be for a new primary residence.  We live in a small town with only a couple of builders, only one of which builds homes in our price range.  This builder is friend from high school and we already bought another house from him last year.  He has indicated that he's going to start a new group of homes in the next couple of months once lumber prices drop a bit more.  We're thinking this new house will likely be in the $350k-$400k range.  We've saved about $100k to invest and continue to save super aggressively so each month that continues to increase.

Prices have been going up quickly and I'm of the belief in my area prices will continue to rise at least for the next year or two.  Supply continues to be low and demand high as conversion of homes into short term rentals is high.  

What strategy could I use to potentially lock in a lower price or obtain a discount with this builder? Although I only plan on ultimately putting 10% down to reserve capital for other investments, I have wondered about if offering a large upfront down payment to the builder now in order to help with his cash flow or initial capital outlay to get his project going would be beneficial enough to offer a lower price or a discount to me. Once we closed I would do a cash out finance up to 90% LTV to preserve my capital.

Any thoughts on this strategy?  Or any ideas on any other strategy I might take now to end up in a better deal on a new build in 8-10 months?  

Thanks for any thoughts!

[Sue Hough]

@Cody Woods great question.  How about taking the most direct route and...”ask” your friend what it would take to lock in your pricing now.  As a builder, there may be other incentives which are appealing to your friend, or he may be unable to accommodate your wishes. You will never know until you ask.

Good luck