Investing in a pre-construction property, no doubt, involve some risks but if you have the right realtor agent by your side, you should only count on its benefits. Yes, by hiring pre-construction services from a reputed real estate agency, you can enjoy various benefits that no other investor can enjoy in properties post construction.
Purchasing pre construction condos, apartments or homes in Miami is quite different than purchasing an already completed residence. Whether you are investing in a property to rent out or using it for your residence, you must have an understanding of pre-construction project timeline. If you understand this aspect well, you can use it to your advantage.
A property development project generally has four phases named as reservation, contract, construction and completion.
Reservation Phase –
It is the earliest phase of the project in which developer is still planning with the city and state and the building exists only as a vision in blueprints, drawings or other renderings. The good thing about this phase is that developers offer the biggest discounts in this phase.
So, this is highly beneficial especially for those investors who want to buy multiple condos or apartments to add to their rental portfolio. It is because they can leverage their capital with low deposit amounts.
In this stage, your purchase prices are secured but your money can still be refunded, in case you decide to cancel. If you want to be clear about where it would be more beneficial to invest, again I would recommend you to hire pre-construction services as specialized agents know every small and big detail and will advise you the best.
Contract Phase –
As the developers get the approval from local and state governments, they send the purchase agreement to all those investors who have made reservations in the first phase. Once you sign the contract, you will enter into the right of rescission period in which you will have 15 days to review the contract and all documents thoroughly before your deposit is no longer refundable. In this stage, you have to pay another portion of the deposit to go under the contract.
If you enter into the project in this phase, your initial deposit will be higher as most of the developers increase prices by this stage. However, the contract stage prices are still quite lower than the market value but the plus point is that you have certainty that the project will be completed.
Construction Phase –
As the developer hit the ground on the project, the construction of luxury high rise building usually lasts between 18 to 24 months. If there is any delay that would be most probably due to factors like weather and labor issues. The investors who entered early in the project will usually watch their values rise during this stage. As the construction proceeds, continues and developer achieves certain milestones, new investors (who enter in this stage) will be required to provide more monetary value as the deposit.
Completion Phase –
After a project is completed and all inspection processes have been carried out, it comes the time to close on your property. You will get the ownership and occupancy. The investors who wait until the project is completed get the opportunity to see what they are buying but lose all the financial benefits that come from signing in the project at early stages.
People who invest during reservation and sign the purchase agreement early in the project timeline often closes with a huge amount of money even tens of thousands of dollars in equity. Moreover, reselling your new condo at or near market prices after completion is a very lucrative option.
The only difference makes where and when you invest and all that knowledge comes from a competent real estate agent when you hire pre-construction services. The choice is always yours!!