The subdivision in suburban America is where a good percentage of people live. They allow you to congregate with other people in the same income bracket and stage of life. Subdivisions can offer many amenities that you may not be able to afford on your own. However, if you are one of the first ones in a new subdivision, you might be in for a rude awakening. There are a few reasons that you should not be the first in a new subdivision.
1. Developer goes bankrupt This is obviously the worst case scenario when dealing with a new subdivision. When a builder goes bankrupt in the middle of the building process time, it can hurt you in a number of different ways. Most of the bad scenarios start out with the bankruptcy of the developer.
2. Amenities are not built at all When you first signed on for this project, the developer showed you a list of amenities that would be built in the new subdivision. They showed you a computer image of how the pool would look, the tennis courts, and the walking trail. There might have been a nice playground and clubhouse in the works as well. However, what happens when the developer goes bankrupt? None of those things end up getting built. In some cases, they are waiting to get some of your money before they get started. Once they sell a few houses, they can then use that money to bring in some amenities. Don t plan on any amenities until you see them already done.
3. No maintenance Let s say that you are in a brand new subdivision that has a grand entrance and several common areas. All of these areas are landscaped beautifully and the grass is kept nice and short. When the developer goes out of business, who is left to take care of those things? You can either pay for it out of your own pocket or you can let the grass grow up. The subdivision is going to look terrible or you re going to be spending a lot of money every month to keep it up on your own.
4. No one else buys Even if the developer does stay in business, what happens if no one else buys into the subdivision? You and a few other houses are all that goes up and now you are surrounded by big empty lots. This is not good for your property values and the amenities will probably not be built.
5. Different developer comes in If the developer goes bankrupt, the remaining lots could be sold to another builder. Let s say that you bought into the subdivision early and built a $500,000 house on the lot. Then another developer buys the lots and puts in $150,000 houses that all look exactly the same. This will kill your property value. You will be stuck there or you will take a huge loss on the sale of your house.
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