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A real estate developer wishing to develop a project either from ground up or to go through a condo conversion will typically have to satisfy some bank requirements and have to pre sale a certain percentage of units before he actually starts construction.
Miami pre construction condos usually are good opportunities because developers are willing to provide a discount at the early stage of the selling phase.
The earlier investors are getting into the game, usually the better the price is. The Miami pre construction condo market usually functions the following way:
- A few thousands of dollars are paid at the reservation, during this phase the future buyer may decide at any time to bail out from the project and to get back is deposit, no question asked. During this phase the buyer and the development can get both get out of this pre agreement.
- When the condo documents are ready, the developer and the condo buyer will sign a formal contract, which provides with a 15 day rescission period during which the buyer may still bail out and get his deposit back. Should a substantial modification of the condo documents is performed, it usually opens the door for an opportunity for the seller to get out of his purchasing contract during a defined window frame.
- At the expiration of the rescission period the contract becomes hard and cannot be cancelled. If the buyer decides at this stage to change his mind he will forfeit is deposit.
When the building is completed, the buyer of Miami preconstruction condos will have to close and bring the appropriate financing to do so. Developer contracts are usually cash deal, meaning that there are no financing contingencies, in simpler terms a buyer will come with the full payment at closing or will loose its deposit. Cash deal does not mean that buyer will need to pay cash, they will often seek financing through their bank or mortgage broker.
Miami real estate Developers often offer the flexibility for buyers of Miami pre construction condos to resale their unit before they even close. This possibility is often open after developers have sold 90 % of its units.
In simple term, a buyer might have paid his 20% deposit on say a % 300 000 condo, a year go by, and might resale his condo for a price of 350 000 before the building is finished. The mathematic is as followed Deposit= $ 60 000 Selling price $ 350 000 Transaction’s profit $ 50 000 Return on investment = 50 000/60 000= 80% in one year. This kind of return is difficult to beat.
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