Preconstruction Investing

Pre-construction sales opportunities can be a very profitable way to invest in real estate. You provide a small down payment and make no mortgage payments until the unit reaches completion. The investment leverage lies in buying properties at a discounted price in anticipation of future appreciation as the project is completed.

You, the buyer, are basically receiving a discount for your willingness to purchase a property without seeing the finished product. You have only builder brochures, floor plans, site maps, and other specialized amenity information to make your purchasing decision.

Selling units during preconstruction actually helps the builder achieve the required percentage of pre-sold units needed to obtain their construction financing. The prices of these units are typically sold at a significant discount below the proposed future price of the finished units.

Built-in Equity

In a typical preconstruction scenario, built-in equity starts from ground zero, since you are buying at a discount. You are locking in equity profit when you purchase in the initial phases of a development.

Appreciation works in your favor at this stage— it usually takes anywhere from 8 to 24 months for a property to be built, depending on size of the project. Then, as the project takes shape, interest from potential buyers increases, thus pushing prices up along that same curve.

And while there is no guarantee that this happens 100% of the time, this has been the trend in past years.

Some of the many benefits of purchasing pre-construction properties are:

1. Small down payment, typically 5% but can be as high as 20%.
2. No mortgage payments until project completion (anywhere from 8 to 24 months)
3. Ability to customize and add upgrades for resale.
4. Modern, energy efficient designs and the latest safety codes.
5. No property maintenance for year one with builder warranty then low property maintenance due to newness of property.
6. Often times you can market your home for resale or rental prior to completion.

Contact me for the latest, most up-to-date information on preconstruction opportunities for investment purposes, for second home use, or both.

 

I have answers for all of your questions. Call me today!

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