Buying a pre construction Miami condo is an exciting proposition that needs to be planned and approached diligently. When you choose to invest in a development before its construction, you are investing in a vision of the completed project based on blueprints and web, video, or in-person presentations by the developer. Yet, pre-construction projects offer deep discounts to buyers so they can attract financing. You also have the opportunity to be the first owner and have your first choice of floor plans, making the idea of buying pre-construction an attractive option. Here are some of the major things you need to know when buying a pre-construction Miami condo:
The developer wants to create hype around the project to attract financing from banks and investors and attract more buyers, so getting in early on a project offers you several advantages. Signing early typically allows you to get the deepest discounts that the developer will offer, often referred to as "first tier pricing." In the early stages, you do not have to buy the condo, but instead, you will place a deposit on the unit of your choice. Deposit requirements are low and you have the ability to cancel without penalty during the earliest stage of development. You will also have a wider selection of units when you get involved early, giving you the opportunity to choose the condo that fits your needs. It's in your best interest to have a reputable broker for this process. Not only will they guide you through the process, but they have access to "friends and family" releases and will ensure that you have access to first tier pricing
When you choose to invest in Miami buying in a new development, your purpose, lifestyle, and budget will factor into your decision. Here are some of the things you will need to consider when selecting the perfect condo for your needs:
Purchasing preconstruction condos in Miami is different than purchasing a residence that is already completed. Whether you are an investor looking to rent out your condo or using it for a residence, you need to have an understanding of the Pre-construction project timeline, so you can use it to your advantage. A condo development project generally has four phases: reservation, contract, construction, completion.
Reservation
The reservation phase is the earliest phase of the project where the developer is still making plans with the city and state and the building only exists as a vision in blueprints and other renderings. As previously discussed, developers offer the biggest discounts in this stage. This is especially advantageous to investors who are looking to buy multiple condos to add to their rental portfolio because they can leverage their capital with low deposit amounts. During this stage, the purchase price has been secured; however, your monies are still refundable if you decide to cancel.
Contract
Once the developer has received approval from the local and state governments regarding the offering plan, they will deliver the purchase agreement to any who have reservations. After you sign the contract, you will enter into a right of rescission period, in which you have 15 days to review the contract and all other materials before your deposit is no longer refundable. Typically, you will have to pay another portion of a deposit when you go under contract. If you are getting in on the project during the contract phase, your initial deposit will be higher and it is most likely that the developer has increased prices by this time. During the contract phase prices are still well below market value, but you have greater certainty that the project will be completed.
Construction
Once the developer breaks ground on the project, construction of most luxury high rise buildings last between 18-24 months. Things such as weather and labor issues may cause delays on occasion. Those who got in early on the project will usually watch their values rise during this time. As construction continues and the developer reaches certain milestones, you will often be required to provide more of a deposit.
Completion
When the project is completed it must pass all inspections, then it is time to close on your condo. You will take ownership and occupancy if you plan on using the condo as a residence. If you wait until the project is completed, you will get to see what you are purchasing before you buy, but you lose most of the financial benefits that come from signing on early. Investors who made a reservation and signed a purchase agreement early in the project timeline often times close with tens of thousands of dollars in equity. Reselling your new condo at or near market prices upon completion may be very lucrative.
The best thing you can do for yourself when you buy a pre-construction condo in Miami is to use an experienced realtor. Skilled agents can guide you on selecting developers, buildings, and neighborhoods, but one that specializes in pre-construction condos will help you use the timelines to your advantage as well as introducing you to projects where first tier pricing is still available. Also, a reputable agent has a strong professional network that may allow you to get in on new projects before others know about them. Contact us for more information about purchasing a pre-construction condo in Miami.
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