Buying Builder’s Unfinished Inventory

It’s no surprise that the real estate and housing markets have been in considerable flux lately, with increased demand leading to rapidly rising prices in many regions. However, the construction industry and the unfinished housing market have also undergone several recent changes, influencing the real estate investment landscape.

Recent Changes in the Construction Industry

Severe supply chain and manufacturing shortages have led to a lack of materials available for construction, especially materials like electronics, nuts and bolts, screws and washers, and windows. This has led to delays throughout the industry, with some projects even being put on indefinite hold.

Despite this, the number of building permits pending and houses under construction are at a rate not seen since 2007. With interest rates, housing prices, and Builder’s inventory all moving higher while profits margin are being squeezed, something must give for these larger Builders to stay afloat and survive.

Anticipated Changes and Investment Opportunities

While supply chains are expected to start clearing up towards the end of 2022 to allow materials to be more readily available, there is still a significant demand for these materials and a backlog for previously ordered materials that may overwhelm the available supply.

By early to mid-2023, these stresses in the system will lead to a slowdown in construction, resulting in many builders having no choice but to sell off inventory. These mid and large companies did the same back in 2007 & 2008 to shore up their bottom-line to survive another day. This is where money will be made for the smaller investors that have the right plan and lenders backing them! You have time to get your plans and lenders in order now. So, you will be more than ready for this bonanza once it happens.

Benefits of Investing

When building and construction companies begin to sell off their unfinished inventory, they will likely sell at a steep discount, trying to offload these incomplete projects and generate revenue to keep operations running. Investors can take advantage of these deals by buying unfinished inventory and lots for pennies on the dollar.

The prices for finished homes have also increased as demand rises at rates that supply can’t match. As a result, investors purchasing unfinished inventory can invest in finishing these houses, then sell them for a profit despite the increases in material costs. Additionally, investors may choose to hold onto these projects to wait for material prices to stabilize before finishing them, allowing for an even larger profit margin in the future. Another longer-term strategy maybe to finish and hold some of these properties for even more value. The opportunities to make profit is going to be there for the right investors during this next reset.

How Triton Can Help

Triton is a leader in real estate lending, investment, and consulting services to investors. Whether you’re looking to start a new residential or commercial project, purchase a rental property, or buy a house to flip and resell, Triton can get you the funds you need! They go above and beyond to help you succeed, even offering assistance in finding contractors and establishing long-term vendors.

Triton will work with you to create a custom finance plan to best fit your needs, so you can focus on your project. Ready to learn more? Reach out for a consultation for your next construction project or real estate investment deal today.