Pre-Construction Condo Deal?
First time poster here looking for good advise.
My wife and I were in Myrtle Beach last November during the slow tourist season and ran across a new condo development that was selling at pre-construction prices. The location is one of the best, the units construction plans and workmanship looked excellent, the developer has built three other complexes in the area so is knowledgable, and the pricing seemed like a real bargain. That said we put down a 2k deposit to secure our 1520 sq ft, 3br 2bth fully funished unit for 139k, with 10% more due during construction of the unit and the balance at completion.
We traveled back down there last week to check out the progress and were very surprised to find out the entire development had been sold out since we were there four months ago! Ninty plus units reserved and sold since then. The salesman were now taking names as double and triple backups in case buyers with deposits forfieted. All the old pricing was now replaced with new pricing sheets in which my same unit was now listed at 189k!
Does this sound too good to be true? Has anyone had experience in pre-construction condos increasing in value this way anywhere else? I still only have a 2k investment (which is fully refundable) in this unit and now feel as if I just made 50k on it. I know if I let it go back to the development company they will mostly likely make this profit, so I think I would be foolish in doing so. I originally bought it with the thoughts of minimal personal use but mainly as an investment and possible rental. Would I now be smart to try and sell it near completion and is this even possible without having fully paid for the unit yet? To keep it, counting association fees, taxes and inside insurance, would run around 4k per year. So not renting it, and instead using it, would eat up this amount per year. I could also rent it out on a yearly lease program and realize about $500-$600 per month after monthly expenses are paid. There is also a possiblity that these units could appreciate even more after the complex (other buildings, pool area, ponds, landscaping) is completed in the next 3-4 years. Based on the above would you take a quick buck and run, or hold out for the long term? Thank you.
Congrats on your $2,000 investment Precon is leverage at its best. Your situation depends on your goals. I have flipped properties before a project has reached completion and have some longer term www.holdings.I have investments in some great developments that i go to 2 weeks a year and keep rented out the rest of the time. A year holding can reduce your tax burden but you will have cash outlays along the way. So i guess it depends on how much you need the $$ now. And where you think the market is going in the future. Some of my Preconstruction buddies say that 2 years is the best amount of time to wait before selling. I onthe otherhand worry about the amount of new inventory that is comming online inthe next 2-3 years in my area so im selling out (hopefully) over the next 3 months but holding one unit for long term(over a year).
Where is this condo? It it water front for that price?
RonW,
Congrats! That sounds like you made the right decision. I do not have direct experience with precon condos yet, but you should surf through this forum (residential side) and see what others have accomplished.
I have found, after much research, that many people are buying precon condos in Vegas and Florida. I have focused in on Myrtle Beach myself for this reason. I will be purchasing one or two within the next month or so.
What you do at this point is up to you. You may want to sell it and size up, increasing your potential profit. I do not know what the rentals might take in, you may also hold and rent for a year or two.
Keep us updated as to your progress. BTW, which developer did you purchase from?
Take care,
Andy
I would find out who bought the condos investors or owner occupied. I live in a huge community and they do lottery here and the first phase of single family homes and first phase of condos sold out on the day they were released. This is not uncommon in South Florida. Congratulation it seems like you did good I would see what the market it like upon completion.
wow! another guy out in el dorado hills, ca told me how he bought prefinished home for 450k and he now has 8 months after it was completed, a person who wantsto buy it for mid 800k! crazy stuff.
It is totally normal to Flip properties without ever obtaining the deed. We close them simutanoiusly to avoid the complications that can result from an assignment. I like to enjoy my investments so i would say keep the unit for a year or two. If you could (not saying i would) pay cash for it then what do you have to loose. I love vacation property for that reason. If everything goes down hill i can hang out and enjoy tiki drinks while im going broke!
RonW
Congratulations on finding Myrtle Beach. The market here is very strong and the demand for all properties is really hot right now. I have a preconstruction deposit on a beach house in which the whole project is now sold out. The price apreciated about 70k per house as the sales occured. As you said, worse case scenario you just keep the condo and enjoy the area.
JH
[ Edited by commercialking on Date 06/23/2005 ]
Am looking to invest in Myrtle Beach-pre-construction. Question is: Can I flip a property before even lining up financing? I would like to avoid the additional paperwork if possible. I know I need the developers blessing to do this, however, would also like to know what is the perfect time to flip as it relates to the constructon phase of the project? Is there a formula to follow? Also...do most developers maintain a backup list of people interested in buying, should a phase or property sell out?
What type of paperwork is involved in flipping a unit prior to closing on the property? Anyone out there who knows? Lastly, should I flip a property, is it customary for the developer to take a piece of the proceeds?[ Edited by riddy419 on Date 06/15/2005 ]
Hello luvdavy “Jan”,
I called in regard to Sea Mist and they told me it is not assignable, and I would have to close on the deal. Are you sure it could be assigned?
Hi RonW,
Did you and your wife just happen to come upon this development or did you know it was there? How do you find this developments or do you just drive around until you come upon them? Thanks for any help.
Susan
Ron,
We are driving down to SC in a couple of weeks to look around. Are there many developments going on in the area that we will come across or do we have to know where to look? Susan