Newbie..Condo Preconstruction Investment..Orlando Fl
Does anyone know how the Orlando Fl market is...I can put down 10 percent of a preconstruction project in Orlando Fl...where you wait for 2 yrs for it to gain appreciation...and at construction completion..I can live there or sell it.
Anybody know about this area and if this is a wise thing to do? I am a newbie.
Thanks for any direction.
Hi,
Saw your post and just wanted to let you know that I live in Orlando and invest in property here also. What you are planning to do is what alot of us locals have been doing for a few years.
There is a new development, that is past the pre-sales phase, but is still being constructed in Winter Garden, FL. Just outside of the city of Orlando, I live in Winter Garden. The new construction development is called Daniels' Landing and is by Transeastern Homes. I think there are some condos still available.
Hope this helps. By the way we experienced almost 20% increase in value in Winter Garden last year!
Ravi
Thanks...that really helps...I'll call them asap...I'm ready to go....did you look at floorplans etc...to make your decision...or did you just do it...and hoped for the best?
I invest in preconstruction all the time. DO NOT buy if you are not prepared to close. This is a great way to make money but make no mistake, this is a speculative way of investing. You are banking on rising prices.
If you are going to buy preconstruction, buy the highest, the best and the most unique. Buy first day pricing only, and make sure you have someone on the inside of the deal watching it for you. Buy in the first of multiple phases, If there is only one phase, be careful. Put upgrades in, don't be cheap.
Good luck.
Gregg
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Gregg Fous
"Almost every man wastes part of his life attempting to display qualities he does not possess""[ Edited by joel on Date 03/29/2004 ]
[quote]
Buy first day pricing only, and make sure you have someone on the inside of the deal watching it for you.
Gregg,
So just how is one lucky enough to get in on first day pricing...not to mention having an insider???
Also, suppose this insider tells you that things aren't going so good....what are your options? Can you get out?
Thanks!
MJ
This topic is a bucket of bolts with complicated nuts that can fit! New construction speculation for property investing is risky so please beware. We agree you MUST be prepared to close on the property and being honest with the sales office that you are an investor is important in our opinion.
On the upside, this method of property delivery and discounted pricing is a FANTASTIC approach as the owner for 2 year lease options. Your new tenant buyer pays a L/O consideration fee, rent is paid, and in the future the investment is protected becasue you will receive the appropriate appriaisal price when and if the development is 'sold out within 2 years!'
Eric & Rosa
[addsig]
In my opinion you really need to be an insider or have one that is looking after you.
Selling preconstruction condos as a broker is one of the things I spend alot of time on. I also develop condos and sell my own preconstruction. Investing in pre-construction is SPECULATIVE and you must be very careful. Preconstruction investing should only be a part of your RE portfolio, not your only focus.
You cannot get out ater your contract has gone hard with out losing your deposit.
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Gregg Fous
"Almost every man wastes part of his life attempting to display qualities he does not possess""
[ Edited by joel on Date 03/29/2004 ]
Gregg,
Could you provide examples of what you would consider someone looking out for you. I would imagine this would be before you go into contract, because as you mentioned, there is nothing to be done after you locked in your deposit.
I am actually talking about after the contract goes hard as well as before. You should develop a relationship with someone that stays in close touch with the community. What the price increases are, when they occur, what effect they will have on your unit. They should know when you should sell, how to list the product, what upgrades are popular, when the next release will be. A good agent will stay in touch with the insiders and get refferals for resales when possible, etc.
_________________
Gregg Fous
"Almost every man wastes part of his life attempting to display qualities he does not possess""
[ Edited by joel on Date 03/29/2004 ][ Edited by GFous on Date 03/30/2004 ]
Gfocus, I was thinking about doing it in Fl, but I live in NC. is it safe since I will not have anybody on th inside? they are not that popular in NC. :-?
When a developer plans a waterfront high-rise he has many hurdles to overcome, not the least of which is financial. Whether the developer is WCI or Engle homes, financial backers want to gauge the interest in a project and in many cases require the developer to have reservations on a certain percentage of condos before the project is given the green light. This translates into savings for the real estate investor. The developer needs these presales to prove his project and secure his financing and he will give incentives to the early buyers.
In many cases the “first day” price will be lower than the price for the subsequent condo purchasers. Many times the waterfront developer will give an extra incentive to those that reserve a unit by placing a $10,000 deposit with the title company to hold a particular condo. To encourage further price increases he will program increases at scheduled intervals throughout the condo pre-sale stage. This does a few things. It encourages people to buy condos early – because prices are going up, and it is a self-serving prophecy – buyers see the price of the waterfront condo going up, they want to get in on the increases, it creates more demand – and indeed may increase values of the pre construction waterfront condos.
We like projects that are done in phases. These are normally condo buildings one, then condo building two, etc. In the past the best opportunities have been in buying the earlier condo buildings. Property values in Lee County, Florida have gone up an average of 17.1 percent last year, and as real estate investors know, waterfront condos much more. Over the last five years appreciation on real estate has been over 15% a year in Lee County. Couple this potential appreciation with the planned developer increases and price increase could be considerable. For example, when condo building three, unit 801 is ready for sale it may be priced at $880,000, when the same condo in building one sold for $714,000, less than one year earlier. The unit 801 in building one has not even closed yet!
There is a limited supply of buildable waterfront land. Developers can build golf courses and lakes, but it’s pretty difficult to create oceanfront or gulf front – or even riverfront - land. Many people move to Florida to be on the water. Over the next eight years the baby boomer flood will start to peak. Demand is expected to be even greater – and waterfront supply will be limited. If you want to fine-tune your opportunity, buy penthouses. There are certainly fewer of them and buyers will pay a premium to “be on top”.
Lets examine how this works. On December first you decide you want condo 504 in building two. You put $10,000 reservation deposit on the unit since it is a new development and the condo docs and permits are not ready. Three months later these items are ready and it goes to contract. You decide to proceed. (By the way, if you decide not to proceed, you can get your $10,000 back). On February first you put a total of 10% down to bind the contract. It will now take 18 to 24 months to build your condo (This will vary from project to project). This 10% is held with a title company – not the builder. (This is an important point. Your money will be secure and can be returned to you in the case of nonperformance by the builder/developer. You have, in effect, tied up this condo for two years with just 10% of its value. You still get two years of potential appreciation.
When it comes time to sell you condo:
The best way of marketing a contract for a preconstuction condo is within the community of the condo. This is why you need an "insider" By that I mean through the existing sales chamnels used for the new condos. Many time this must be done informally.
The first question I would ask is, "Who did you buy it from?" This should be your first line of marketing. They should help you sell it again. But let's assume the worst:
Let' s assume you bought it from a company rep that is no longer there. I would make a trip to the sales center of the comnnity and meet a few of the reps. Get a feel for what the market is like for resales. Are there a large number of resellers? How are they selling them? Have there been any resales? Ask an agent to check the multiple list. Are there any listed? How are they priced? etc.
Steps I would take:
1. Contact the seller that sold the unit to you.
2. Visit the sales team that is currently working the unit. Get to know them.
3. Establish a realistic price.
4. Pick a knowledgable insider to network with.
5. Get the unit listed on the MLS with an agent.
6. Make sure you are getting Web exposure.
Here is what I have done with one unit I am flipping so far.
-Designed a web site http://www.lascala304.com
-met with all agents selling in the colony
-Put up a placard in the model offering the unit for sale
-visit sales center one a week.
- box ad in the Wall Street Journal
- Condo featured in Florida Design magazine. ( http://www.floridadesign.com)
-put it on MLS
- offered to buy another pre-construction condo from any agent on sight that will sell this one.
Hope this helps. If you are not IN Florida, you need someone there helping you ( if that is where your opportunity is).
REMEMBER - Do not buy a precontstrution condo if you cannot afford to close on it. Use the sleep test. If you can sleep at night after making this reather speculative investment - then you are probably ok. ( Stay away from the Ambien)
Gregg
[ Edited by GFous on Date 03/30/2004 ][ Edited by GFous on Date 03/30/2004 ]
Could you offer any tips on how to find reputable developers in the FL area before construction begins. Should we be looking for companies filing permits than contacting them? I'm a newbie in MD and want to purchase a pre-construction propety in FL, but Im having trouble figuring out who to call. Also are you able to reassign your rights to purchase a condo before closing ( before construction is completed)?
C
Gregg,
Thank you so much for your post. I am new at REI and about a month or two ago I stumbled across a developer of a "neo-traditional" community. The first in the area. They had just received city approvals and will have floorplans complete in May. I expressed my interest and was told I would be the first contacted. I am very excited about being one of the first investors in this deal but there are some uncertainties that maybe you can help with. Now this community will be in a perfect location and is really booming but like I said, it is the first of it's kind, so I don't know if people will want to live like this. Also, I would think I should expect a certain discount if I agree to buy one of these this early...how much should I expect? And you mentioned selling or flipping it but my thought was to keep it and rent it out and not cash in on the appreciation until 5-7 years down the road. Is this a bad idea? How could I base the price for this type of house with no comparibles? I just don't want to sit down with the developer and have them throw out a price that it's worth and then they tell me I get a XX% discount if I buy early without trulely knowing what it's worth. Please Advise!
There are hot spots around the country where this is working well. Often times the builder will not allow assignment of the contract or may prohibit renting for a year. If you must settle be prepared to pay 3% of the sales price to close, plus holding costs (without a renter), plus the cost of settling on the second deal. This could eat up a lot of any profit you made. Like most have said here though GREAT potential to win big or lose big.
I live on the Gulf Coast of Florida (pensacola/Destin/Panama City) and I am a medical Sales rep traveling the East West Corridor. Preconstruction is smoking hot right now. I would consider acting as a contracted guide to keep tabs on your project and interface with condo reps if anyone is interested.
Hi Everyone,
I am also a newbie to pre-construction. What areas are people currently looking at in Florida?(Condo names)? Are there any condos that are going into the 1st phase right now?
Thanks,
Mike
Hi Everyone,
I am also a newbie to pre-construction. What areas are people currently looking at in Florida?(Condo names)? Are there any condos that are going into the 1st phase right now?
Thanks,
Mike
Id like to quote a line from Tony Soprano here "Getting in on the ground floor on any project is great" Like with anything in life there are risks and definitly do your due dilligence but getting in early and enjoying the appreciation for 2 years before the project is complete sounds like a good deal to me. My condo on the strip has gone up 165K and they dont even break ground till this fall. Good Luck.