Miami Preconstruction Condos - Miami Condo Lifestyle

Miami Preconstruction Condos

Miami preconstruction condos have received a tremendous amount of press coverage. Mostly written by staff writers for large papers like the Miami Herald who have little or no personal experience about investing in real estate. To fully understand the opportunity in preconstruction projects in Miami and to avoid the pitfalls of the Miami real estate market, please read the following and then contact the REALTORS at the Miami Condo Lifestyle team at 800-433-5960. We will help you seperate the wheat from the chaffe!

All of Miami-Dade county has been experiencing tremendous real estate development in every price range in the market. New construction projects, commonly referred to as "pre-construction condos" are rising in every community from Aventura to South Beach, Downtown Miami to North Bay Village, Brickell Avenue to Dadeland. There are many different types of buildings; ranging from two story lofts to 70 story waterfront high-rises...ocean front luxury condo-hotels to affordable suburban mid-rise projects. Whether you want an affordable studio apartment in the Miami Arts District or a penthouse mansion in the sky in Bal Harbour...no matter what price range, level of amenities and services, or location one desires...it can be found in Miami.

Miami Condo Lifestyle is dedicated to helping you sort through the hundreds of potential Miami preconstruction real estate opportunities to find just the right situation to fit your goals. To that end, we try to answer the Frequently Asked Questions here, as well as, describe the development phases that each preconstruction project goes through and the different ways to take advantage of the appreciating Miami real estate market.

Miami Preconstruction Projects - Currently Selling or Under Construction

Preconstruction Condos - Development Phases

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:

Phase 1: Reservation

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 5% or 10% of the unit value, with a "reservation agreement". This money is fully refundable

Phase 2: Contract

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". The developers usually require the completion of the 10% contract price.

Phase 3: Construction

When the construction of the project begins or the construction "breaks ground"; a second 10% is required to complete the 20% deposit. The construction may take between 6 months to 2 years.

Phase 4: Closing

Once the development is completed (six months or two years later), you are complete the transaction by "closing" the unit. At this point, the 80% 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.

Preconstruction Condos - FAQ

How does Florida law protect the purchaser of a preconstruction condo?

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.

Why are preconstruction sales necessary?

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.

Why buy a preconstruction unit when I can buy one that is available now?

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.

On what floor and what size unit should I buy?

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.

What are the required deposits for preconstruction condos?

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.

Can I sell my preconstruction purchase before it's completed?

You must have written permission from the developer.

1. You may sell your right to the condominium unit by transferring or assigning the contract to a subsequent purchaser.
2. You may sell your unit under a real estate contract upon completion of the condominium. Two real estate closings will occur simultaneously, your purchase, and the sale to your buyer.

Who may resell my condo?

You have two options in most cases:

1. The developer may resell the unit for you.
2. Your REALTOR^® may find a buyer for you.

In either case there will be a real estate commission but this choice is solely up to you.

What are the advantages of having a relationship with a REALTOR^® when purchasing preconstruction condos?

A professional REALTOR^® will:

• Alert you about new preconstruction projects before they are made public
• Help you compare the pricing in similar buildings in the neighborhood
• Inform you about community infrastructure developments such as service retail and civic investment that may effect the future value of your property
• Help you negotiate the terms of the contract and advise you on alternative choices that may meet your needs
• Share information regarding the relative financial strength and track record of a developer with you

Finally, since all realty fees are paid by the developer, you are getting the services of the REALTOR^® for free!

For more information on upcoming pre-construction projects and how to buy them, please contact us.