Pre Construction Townhouse

[Josh Gaddy]

Thanks everyone who reads this and thanks in advance for any help I get.

I have been offered a deal by a friend of mine who is building 66 townhomes. He has offered to sell me the unit in the most desireable location for 140K, which is 10K less than the normal unit price of 150K. He said he would then sign a two year lease on the unit to use as the model and cover my mortgage. I would not cashflow, but also, I would'nt have to come out of pocket with anything every month. He also said, since its the model, that it would have all the extras, and I could choose what I wanted in there (granite, better fixtures and appliances, etc.) They have not started construction yet and are probably 4 months away. The market is emerging and the townhomes are near a new shopping mall, the interstate, and mass transit. This is an emerging market in a very strong metropolitan market (Charlotte, NC.)

This seems like a good way to build equity and potentially make a good profit or continue to rent our after 2 years. I am hoping for some help on what my financial picture could look like. Also, does anyone have any pitfalls to beware of? I have just never seen this type of transaction, any opinions would help!

Thanks again.