It’s the first time home buyers that drive a housing market. Real estate investors know this and there is a trend in many parts of the country today where rental properties or investment homes are built from the ground up instead of trying to find existing real estate that needs some repairs and are closing costsbuilding new homes to meet the first timer market. Why do real estate investors consider first timers the drivers?

 It’s really easy to figure out if you step back for a moment. The numbers will vary based upon who you ask but it is a generally accepted notion that home owners will keep their home for around seven years before moving up. Those same home owners need the equity in their existing home to be used for the down payment and closing costs on the “move-up” house. First time home buyers don’t have that equity and like everyone else in the home buying arena must save up their own funds or otherwise find a source of funds to help them buy a home. Without first timers, there will be fewer second homes sold.

What can you do as a real estate investor to help these buyers fuel the real estate market? You can help them with their closing costs. If closing costs on a typical transaction are $3,000 you can offer to pay for those closing costs as part of the sales contract. To do this, your unit must be properly priced and a thorough evaluation of the local market needs to be considered using your real estate agent. You don’t want to give anything away but you also want to facilitate the sale. There is a range where your new home is listed at the higher end of the first time home buyer range while still allowing you to contribute to the closing costs. If properties in the area are selling for between $100,000 and $110,000 you can decide to sell at $105,000 or at $108,000 with a seller contribution of $3,000. Done right, the math works the same.