New Developments and Pre-construction projects. This is a great opportunity to save up to 30% of what the finished product will cost. Essentially, since construction of the building is being funded with purchaser deposits instead of a bank loan, the savings in financing costs are being passed down to the buyer.
The window of opportunity won’t last very long.
For more information call 305 751-1000 today
The primary benefit of investing in preconstruction condo projects is that it offers the purchaser the ability to leverage a large asset with a relatively small amount of money (typically 10 to 20%) and enjoy the real estate appreciation of the property over time without the carrying costs, such as interest and taxes.
Each preconstruction condo project goes through four different phases:
In this phase, the developer is offering the units at the lowest price of all future stages. These prices are always below the market price and give the developer the chance to test the real demand for the project, helping the financing process that they face with their current lenders. The buyer will find the great chance to "reserve" the chosen unit with a deposit of 10-20% of the unit value, with a "reservation agreement". This money is fully refundable.
Once the developer reaches the point of the required number of reservation agreements, they create the "hard-contracts" with the "condominium-documents" specifying in detail all the legal and technical specifications of the development. This stage is usually reached between 1 and 3 months after the "reservation agreement".
When the construction of the project begins or the construction "breaks ground"; a second deposit of 10-20% is required. The construction may take between 18 months to 2 years. Another 10-20% may be required when construction reaches level where buyer's property is or when roof of the building is complete.
Once the development is completed (eifhteen months or two years later), buyer completes the transaction by "closing" the unit. At this point, the remaining % will be required, and the mortgage or the cash payoff will have to be available, along with the closing costs and all the typical expenses related to a Florida real estate transaction.
In Florida, purchasers have a fifteen (15) day rescission period starting with their receipt of the Public Offering Statement, which includes the condominium documents, association by-laws, preconstruction purchase contract and escrow agreement; to review and complete or rescind any condominium purchase and escrow agreement and receive a full refund of their deposit if they rescind.
The most important protection under Florida law is that your deposit is held in an escrow account. These funds will be not released until the closing of your unit unless the developer designates a portion of the deposits may be used for construction in the contract.
Most developers are required by their lenders to pre-sell a certain percentage of their projects before the bank or lender will lend them the funds for construction. This is the risk (and the opportunity) when buying a preconstruction condo unit. If for some reason the developer decides not to build the project then your deposit money has not been appreciating. Preselling condos has become a standard practice. Once the required presale percentages have been reached and construction has begun, your risk is greatly reduced.
By purchasing at pre-sale you are able to leverage your down payment and control 100% of an appreciating asset with a small (20%) investment. Many people have purchased preconstruction condos and have sold their units for a profit even before the building is completed.
If you are expecting to close and live in the residence then you should select the view and floor height that will appreciate most over time as well as one that you will enjoy living in. The higher floor with unobstructed views are the best.
If, however, you plan to lease the condo to a tenant, you will want one that appeals to the greatest number of potential tenants. This can also depend on the area your purchase is located. If you are in an urban environment, a one bedroom for single tenants may be best; in a resort area, a condo-hotel unit with a management program may work for you. In a suburban neighborhood, two bedrooms are often better because they attract couples without children, single parents with a child or singles with a roommate.
If you plan to sell your condo purchase for a profit as quickly as possible then the least expensive unit on the lowest floor (typically studios and one bedrooms) have shown the highest percentage of return based on previous condominium resales.
With most preconstruction condos you will be required to deposit twenty (20) percent by the time the developer "breaks ground". Typically, there is an initial reservation fee, then the remainder of the first ten(10)percent at the time of contract. The final ten (10) percent is required when the developer breaks ground.
You must have written permission from the developer.
Miami Residence may find a buyer for you.
A professional Miami Residence REALTOR® will:
For more information call 305 751-1000 today