Preconstruction condos in Miami

Preconstruction condos in Miami

South Florida investors have a terrific opportunity to save 30% or more on preconstruction condos in Miami.  Purchase deposits are now being used for financing these types of projects rather than traditional bank loans.  This saves the building contractors money, and they pass the savings down to you!  But hurry.  This opportunity will disappear very quickly.

These types of construction projects have been receiving a great deal of coverage in the press lately, usually by reporters with very little professional or personal experience in real estate investing.  Understanding the possible pitfalls and opportunities in acquiring preconstruction properties can be rather confusing, but we are here to help clarify.

Real estate development has been on the rise in nearly every real estate market and price range of Miami-Dade County.  New preconstruction condos are being built in nearly every neighborhood, including South Beach, Aventura, downtown Miami, Brickell Avenue, Bay Village, and Dadeland.  Nearly every style of complex imaginable is being constructed, from soaring, seaside high-rises to two story lofts and waterfront luxury condo/hotel combinations.  Even suburban midrise condominiums are popping up all over the area.  Whether your preference is to live in a beautiful penthouse suite high atop a 70 story skyscraper in Bal Harbour or in a comfortable studio apartment located somewhere within the Miami Deco District, there’s certain to be many options of preconstruction condos to choose from with a variety of various amenities, services, and price ranges.

We can help you to locate the perfect property to suit your individual needs and tastes by helping you sort through the pages and pages of real estate listings for Miami preconstruction opportunities.  We are always available to answer any of your questions or to address any of your concerns, helping you to understand the different development phases of each type of preconstruction condominium available in the Miami real estate market.

 

Phases of Preconstruction

The ability of the investor to leverage a rather expensive piece of real estate with only a relatively small amount of financial capital is one of the key benefits of investing in these types of preconstruction condominiums.  Owners will then be afforded the opportunity of increased property appreciation over a consistent amount of time without having to burden themselves with excessive interest and tax costs.  There are four different phases to each of these types of preconstruction projects.

First Phase: Reserve your Condo

It will be during the preconstruction process that the developer will be able to offer the individual units at the lowest possible prices, far lower than in any of the other future stages.  Prices will consistently be far below current market value, providing the property developer with the opportunity to test the waters to determine what the final purchase price will be based on consumer demand and interest in the project.  This will also help the developer to secure further financing as time goes on from their current lending institutions.  The preconstruction phase is the perfect time for new buyers to “reserve” the perfect condominium with only a minimal deposit of perhaps 10% to 20% of the total value of the unit.  This money is always completely and totally refundable.  The “reservation agreement” is signed at this time.

Second Phase: Agreeing to the Contract

“Hard Contracts” with included “condominium documents” will be created by the developer once he reaches a certain predetermined point at which a certain number of reservation agreements have been signed.  These documents will detail all of the technical and legal specifications required for the development.  This phase usually occurs approximately 1 to 3 months after the signing of the “reservation agreement”.

Third Phase: Construction Begins

Once the preconstruction project begins to break ground, a second financial deposit is usually required of perhaps 10% to 20% of the total cost of the unit.  Finalizing of the construction process may take anywhere from 18 months to approximately 2 years.  An additional 10% to 20% may also be required once the construction begins to reach the floor level at which the buyer’s unit will be located or when the building’s roof has been completed.

Fourth Phase: The Closing

After the complex has been completely constructed, the buyer will be requested to complete the financial transaction through the “closing” process.  At this time, the remaining balance for the cost of the unit will be required.  The buyer will need to acquire a mortgage or payoff the remaining percentage in cash as well as pay all remaining closing costs and additional standard expenses related to a typical transaction of a piece of Florida real estate.

 

Preconstruction Condos in Miami: Facts and Questions

Does Florida provide any buyer protection of preconstruction condominiums?

All buyers of preconstruction projects in Florida will be granted a 15 day rescission period beginning with the receipt of the Public Offering Statement, including all condominium documents, the preconstruction purchasing contract, condo Association bylaws, and of course the escrow agreement.  During this time frame, purchasers will have a chance to review and complete the condominium purchase transaction as well as the escrow agreement or will have the opportunity to rescind the offer entirely and regain their financial deposit.

Why do developers so preconstruction units anyway?

Most financial lenders require their developers to pre-sell a certain number of the units before the lender will give the developer the money that is needed to begin and complete construction.  This is perhaps the most significant risk in purchasing a preconstruction condominium.  If for any reason the developer decides not to construct the project, then the money used for your financial deposit will have lost the opportunity to appreciate in value through some other means.  The pre-selling of condominiums is a very standard practice throughout the United States.  Once the required pre-sell percentages have been met and the construction process is underway, the risk is significantly reduced.

What are the advantages of buying a preconstruction condo rather than buying one that is already built?

Buying preconstruction condominiums allows you to leverage the money used for your down payment, controlling 100% of its appreciation value with only a very minimal amount of initial financial investment, usually from 10% to 20%.  In many cases, investors purchase these preconstruction units, only to quickly sell them for huge profits well before the final construction process is even completed.

What size unit in on what floor should I buy a preconstruction condo?

If your plan is to buy the unit for you and your family to live in, then simply select the floor plan, floor level, and view that you would prefer over an extended period of time.  Higher floors tend to provide more unobstructed views and are often considered the most preferred.

However, if you plan to purchase the unit as a future rental property, then you might want to consider the options that would appeal to the largest number of potential tenants.  The area in which your condominium building is located may be a contributing factor.  If your building is in a very urban area, then perhaps a one-bedroom unit would be best since many of your applying tenants may be young, single adults.  For rental units in suburban neighborhoods, you might decide to go with a two-bedroom unit as a means of attracting single parents, singles with roommates, or work-at-home professionals.

What types of deposits will need to pay when I buy a preconstruction condo?

In most cases, you will need to deposit a minimum of 20% of the total purchase price of the unit at the time that the developer begins construction or “breaks ground”.  There is also usually an initial reservations fee as well.

Will I be able to sell my preconstruction unit prior to the final construction being completed?

This is possible, but only with prior written permission of the developer.

  • In some cases, you will be allowed to sell your right to the preconstruction condo by assigning or transferring the contract to a new purchaser.
  • You can also sell your preconstruction condo immediately upon completion of the complex by means of a standard real estate contract.  In these cases, there will be two simultaneously occurring closings, one for your own purchase and the second for your selling to the new buyer.