Pre-construction pricing can give the best opportunity for
equity growth, and "cash on cash" profit.
In the Orlando area, preconstruction Real Estate has been an excellent
way an investor can gain equity through builder price increases. If you
can buy 1st phase preconstruction, the builder will typically increase
his prices each phase, until by the time your condo hotel is built, the
builder should be selling the same condo hotel unit for more. Preconstruction
coupled with a qualified buyer's agent who can find the best locations,
floor plans, and builder, can show a great appreciation for the savvy
second home buyer.
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Lighthouse
Key will overlook a 69 acre ski lake, just 4 miles from Disney
World. These units are huge, and the resort has a movie theatre,
games room, spa and more. Price start in the high $300's with 10%
down.
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Unlike any other resort in Orlando, Florida, Ravallo Resort
and Conference Center sets the scale for high end condo-hotels
with convention facilities with its location, amenities
and Mediterranean inspired design. |
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The Blue
Rose will be a 2,000 unit luxury condo hotel with 6 restaurants, a spa
and a 1,000 seat Broadway theatre. Located on International Drive this
condo hotel will cater to the 2nd largest convention center in the USA.
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Westin's Village of Imagine - Luxurious, affordable, and the
best location in town, does it get any better than this? Prices start
in the $300's. |
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San
Marco Resort - Imagine surrounding luxury, with all your heart's
desires! 14th century Venice in a luxury condominium in the lake Buena
Vista area of Orlando Florida. Prices start in the $300's. |
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Palazzo Del Lago
- Nestled among lush tropical landscaping indigenous
to the Florida of days gone by, Palazzo Del Lago is a faithful recreation
of timeless old-world Mediterranean luxury. Palazzo Del Lago is the
most significant resort project in Orlando and like nowhere else on
earth. Prices from the $300's. |
The Preconstruction Process Explained
PRICE
When a developer plans a new development of any nature, both commercial lenders
and private investors ascertain the buying public’s actual level of interest
prior to funding a project. With adequate interest, funding has a strong
potential for moving forward. This can translate into potential savings for
buyers who are willing to reserve a unit or make a purchase at this earliest
stage.
POTENTIAL APPRECIATION
Although there is never a guaranty, in many cases the "first release" price will
be lower than the price for subsequent purchasers. In some cases, developers
even offer additional incentives such as furniture packages or closing cost
rebates. When the project progresses from planning to reality, interest by
end-users increases. Needless to say, with building in progress, flashy
brochures and marketing in place pricing tends to increase. Although this has
been the trend thus far, there is no guaranty that this will continue into the
future.
ONGOING APPRECIATION
Many condo hotel projects are released in phases, for example, the developer
will release for sale 50 units, followed by additional releases of 20
condo hotel units each. Of course, the first release tends toward entry
level and each later release shows an increase, in some cases significant.
SUPPLY AND DEMAND
The economic rule of supply and demand certainly has been coming into
play with central Florida real estate, especially properties close to
the attractions and the Orlando convention center. At this point in time,
the demand is very high. Due to restrictions by various cities and counties
involved, there are certain limitations in terms of the number of available
properties. According to some analysts, over the next eight years, the
baby boomer flood will start to peak. Demand may be even greater than
it is now, and the overall supply will probably be more limited.
RESERVATION AGREEMENTS
Reservation Agreements: First, a reservation is nothing more than a Right of
First Refusal. You, as a buyer, are under no obligation whatsoever. For this
position, you will place a reservation fee of anywhere from $10,000 to 10% of
the proposed purchase price. At the point where the developer is ready to sell
the units, you elect to move forward with a purchase contract or to bow out. If
you decide the purchase is not for you, the reservation fee is refunded in full.
Basically, during the reservation phase you have nothing to lose and everything
to gain. Though developers prefer to go directly to binding purchase agreement ,
Reservation Agreements are used when they choose to begin sales prior to having
all permits in place, and prior to condominium documents approval by the Florida
State Government.
If you decide to go ahead with the purchase agreement, payment of the balance of
the down payment will be required, typically within 30 days. You will then be
granted a 15-day (calendar) rescission period (for CONDOS only) during which
buyers may obtain an attorney to review the contract and condominium documents,
or at the very least do so themselves. Once the rescission period is over,
buyers are committed and any defaults will result in a loss of the deposit.
When the building site preparation begins, a second 10% deposit is generally
required. From this point forward, the purchase remains on hold until the
development is complete and the property can move forward to closing in which
case either a cash payoff or mortgage will be required.
SELLING EARLY
There are two options in terms of selling prior to closing (flipping).
Assignment of contract. This has rapidly become almost impossible to find, as
most developers do not allow assignment of contracts. It is a possibility, rare
as it may be, in some communities. The second option becomes possible, when
builders will “resell” units once the entire development is sold out. If choices
one or two are not offered, there is the option of a simultaneous closing.
The exact percentage of price and costs involved vary. Buyers may also obtain
the services of a real estate company to promote their unit, though as a rule,
MLS listing before closing on property is prohibited and may be a breach of
contract.
A simultaneous closing occurs when the developer closes on the property with the
original buyer who then immediately sells the property. To learn more about
availability and costs for either of these programs, consult your MBT Homes Real Estate associate.
DISCLAIMER
MBT Homes Real Estate is a Florida licensed real estate broker and is
competent only to provide information of a factual nature concerning properties
for sale. Nothing in this document or website is intended as investment, legal,
or accounting advice, nor should the information contained herein be construed
or understood as such. Only professionals licensed as investment counselors,
accountants, and attorneys are qualified to provide counsel with regard to these
other areas.
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