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| The answer is simple, to make a return on your investment. There are a variety of factors that will determine your return. 1) Your purchase price- Generally, you will receive the largest discount at the earliest stages of the properties sales.
2) Developer Price Increases- Many developers sell their projects in phases and will raise prices as the project moves forward. It is not uncommon for a person who bought in phase 1 of a project to pay considerably less than a person who bought in a later phase. Many developers also raise prices to control the demand and supply ratio.
3) General Economics- The law of economics states that prices increase when there is more demand then supply and visa versa. Lack of suitable land to build on and a dramatically increasing population are both catalysts for price increases.
4) Lack Of Carrying Costs-Aside from the down payment required when an investor goes to contract, there is no other out of pocket expenses(Taxes, Mortgage, Maintenance and Insurance). Therefore, an investor can experience and take advantage of the increasing price potential and not pay a dime to carry the property! |
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Investing in resort property is easier than you might think. And surprisingly, you can do it with minimal financial exposure. Best of all, it's a proven strategy that can yield a significant return on investment.
In order to secure bank financing for high-rise condominium projects, developers offer individual units for "pre-sale" to the public. First, they put together plans and renderings for the proposed development. Then, working with real estate brokers and agents, they offer buyers first right of "refusal" on specific condominium units. Buyers then follow a safe, clearly defined and government-regulated process to control an interest in the project - and to choose one of three exit strategies to realize potential profit from their investments.
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The reservation period begins when a developer secures a property on which to build - and then creates floor plans, artist renderings and a brief description of the proposed project. The developer then takes this concept to his or her network of real estate agents, who then pass it along to their clients. During the reservation period, interested buyers "reserve" the units of their choice by putting up a refundable deposit - usually from as little as $5,500 up to about $10,000. The deposit is fully refundable, and is held in an interest-bearing escrow account with a title company. The Reservation Period ends when the project has "sold out" - at which the developer can obtain funding and begin building. The market for pre-construction investing can be competitive, so we recommend that you sign up for our Insider email list to learn about new projects as soon as they're available.
When the developer is ready to begin construction, he will prepare a set of state-approved Condominium Documents. As a pre-construction investor, you would then have 15 days to review the documents and choose whether to commit (Hard Contract) to the unit(s) you reserved, or to request a full refund of your deposit. No obligation. No penalty. You can simply walk away with your deposit to use as you see fit.
Should you choose to move ahead with the unit(s) you've reserved, then you can simply complete the necessary paperwork during the Right of Rescission Period and arrange to put up money in earnest toward your purchase. Typically, earnest money comes out to 20% of the purchase price minus your initial deposit. At this point, many investors elect to pay 10% of the balance, then secure the other 10% using a Letter of Credit from a bank of their choice. Either way, you've now secured your investment through construction (usually 18 - 24 months) and until closing.
When the condominium project is complete, you'll receive a Certificate of Occupancy (CO). From there, it's a lot like buying any new home. And it's an exciting time. You'll walk through your unit for the first time, work out a punch list, and oversee any necessary final adjustments. Prior to closing, you'll perform a final inspection. Then, it's time for closing. By this time, you will also have made arrangements to fund the balance - either with cash or by securing a mortgage.
By investing in pre-construction real estate, it's possible for an individual to control a $500,000 property with just $50,000 over a 2 year period. There simply aren't many comparable strategies that allow this much leverage with such low exposure. And even though it's a condominium, there are no out-of-pocket expenses during construction. No HOA dues. No maintenance fees. No property taxes. It's just that simple. And it's not hard to see why so many investors are catching on.
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| An investor purchased a condo unit off-plan in South Beach for $400,000 and sold it for $587,000 just weeks after closing on it. |
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| An Off-Plan condo unit in Ft. Lauderdale was purchased for $277,000 and sold less than 18 months after contract for $368,000. |
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| In 2003 an investor purchased a condominium unit Off-Plan in Miami for $935,000, a few months after closing on the unit it was sold for $1,250,000. |
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| A house in Wellington Florida was purchased in 2003 for $265,000, since its closing it has been rented 100% of the time with a break even cash flow. The property was recently appraised for $525,000. |
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| A Town House in Delray Beach was purchased in 2004 for $330,000 and was sold just weeks after its closing for $419,000. |
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| A condo unit was purchased in South beach in April of 2005 for $2,300,000, 3 weeks later the developer sold similar units for over $3,000,000. |
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This is just a small handful of our investors success stories. You can also be on the list of success stories. Start investing now through Liberty Invest Ltd and you will be on your way to becoming a successful
Pre-Construction investor!
View Pre-Construction Offers > |
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