Is preconstruction property in Seymour, TN a good investment?

I attended a real estate expo in San Francisco where a real estate agent was trying to sell preconstruction property in Seymour, TN. I got the packet in the mail and read that I have the option to sell within 6-12 months after construction, rent the property, or lease it to a tenant. If I lease the home, i'll lose equity because the tenant would pay less rent than I would owe on the mortgage. The interest rate is approx. 7.5%.
I could rent it, but it's the question about the remainder of the money owed on that mortgage. However, If i sell the home after construction within 6-12 months, the agent says I'll make a profit. He said that the first home sold, the seller made $35,000. Does this sound like a scam?

Summary Illustration: typical lot(varies)=$42,000; typical model price=$149,000; net home price=$191,000; closing cost on loan=$9,000; construction interest=$6,000. Therefore: Total costs to build=$206,000. Total loan amount=$204,300 (90% LTV). Appraisal=$227,000. Total out of pocket=$1,000-$1,700

It is not a scam... It sounds about right....BUT.... Now lets get down to "Brass Tacks" wrong area....

Seymour, although close to Knoxville, and Gatlinburg is not an ideal location. Look slightly south and east, there are many new developments in and around Rockwood, TN. Only 30 min. from Knoxville and lots of other things in the area.

Before you invest, check the area first and see what is planned for in the near future (all available on the internet as well as area Realtor knowledge) There is major growth in and around Rockwood with very few houses available, where-as Seymour has a 'glut' of houses available now. More than 200 times than in a growing area like Rockwood, and it is like a suburb of Knoxville so you are competing with 'city' housing.

For me, I wouldn't do it. Sounds like you did your homework, just be careful...

Ed

Think about it... don't ALL the best investments sell themselves without having to hold seminars or advertise at "expos"? Have you EVER heard Coca-Cola advertise their stock rather than their product?

This is a free country, but it sounds like a scam to me...

You might find some info on "average DOM" (days on market) at the link below, which will give you some idea of just how long it may take to sell the property that hasn't been built yet!