Pre-Construction Condos
I am a Newbie looking for advice!
I would like to start looking for pre-construction condos. I am considering either Las Vegas or Myrtle Beach. Can anybody lend me insight to either area? Is this a good way to get started if I can can put minimum down and rent when I am not using it to cover most of the costs? Does anyone know of any current developments?
Any help would be appreciated.
I just found this website and I like what I see so far. Very professional and to the point, not all marketing fluff.
Good Job TCRI
Don
I know Las Vegas is a booming area, last year appreciation was 54%, i am doing several conversion units one block off the strip, and getting in far below appraised value. I have also done this same thing in Florida, where the appreciation is doing very well and i beleive has a strong historical track and great rental potential. I am just doing my research in the SC area, and have been hearing that this is another hot area. I am not as familiar with SC as with LV or FL, but the beauty of RE is that there is always a great market somewhere. I can pass on what i have done is LV and FL if it helps and i was sent some links last night on SC that look very interesting.
cbrechbill1
I am familiar with Las Vegas, I did live there for 6 years. I know that town changes fast, and I have not been there for 2 years. Florida would have been another choice but I am not familiar with the market there.
Any info you could send me on what you are doing in Florida, SC, and Vegas would be great. I will pass on to you any thing I find out about SC.
What kind of conversions are you doing? Have you purchased any Pre-construction? Do you rent or flip?
Thanks for your help,
Don
I have purchased several of these mainly becuase i get in below appraised value and the developer offers a 24 month leaseback which is equal to 15% of the sales price, so I basicly get 24 months of guaranteed income which cover all my expenses. I have been with this developer for 5 years and have seen his tract record, i have done very well with these investments. He is not doing anything special, just i pick areas (preferably waterfront) that have a strong track record. I think the key is doing your homework and being confident in the investment. There are a lot of deals that look good up front but can sometimes leave you holding the bag. I have been looking at SC area all day today, and this looks to be very promising, although the lack of true waterfront makes me want to dig a little deeper. If someone has seen this first hand, can you tell me if they are direct access to the water and what kind of supporting ammenities are there to continue the draw for vacationers and utlimately residents?
I know that both Las vegas and Myrtle Beach are good areas for investing , especially Vegas is booming. I also know of an investment oportunity in Costa Rica if you are interested, vacation rentals fetch a higher income as it is ususally rented by the week.
Costarica,
What do you know specific to Las Vegas and Myrtle Beach. Any particulars to look at or stay away from?
I currently live in Las Vegas and got in on the ground floor of a hotel/condo right in the middle of the strip. Its not scheduled to be finished until spring of 2008 and I go into contract next month(end of May). I have to go stated because of my tax returns, I hardly make any money on paper(40k). Is there any advice out there on things I can do to be more prepared when Its time to go into contract? And has anyone had any problems with financing these hotel/condo units. The condo is 600k on the 53rd floor with 10% due at contract and another 10% due next july. Any advice or thoughts would be helpfull, thanks
Exactly what are you folks doing with the condos after you buy them. Reselling immediately for profit? Renting? Other? Sounds interesting to me, however I would be wary to invest in potential "bubble" markets. My understanding is that condos are the first thing to depreciate in these markets. On the other hand, real estate located on desirable sites with limited availability, ie Myrtle Beach waterfront, will always be a good investment as long as the buying price is right.
Regards,
Brad
Does anybody know of the best wat to locate pre-construction deals? I seem to locate them a little too late, when the cost has already appreciated, or the have already sold out.
Do you search for developers in the area who have a tract record and contact them?
Do RE agents usually have early notice.
Would the local building dept. or Chamber of Commerce have info.?
Don
Brad,
Every investor has their own exit strategy, i always look at immediate cash equaity vs. a long term cash flow. Currently with the investments i have done the 24 month leaseback allows me the luxury to choose. At month 18 i look and see what the rental history has been on the property, if it is creating a substatial cash flow i will keep it past the 24 months and place it into a short term rental program (NOT TIMESHARE), of course i have to pay 30% to the PM but all this is hammered out on the finance side when i make the determination. I usually by several units and sale a few so i can move into the next project (currently rolling into Sarasota) and keep the other as a long term investment, eventually the rental side will move into a resedenital resale and i will again reap the apprecaited reward. Every investment is unique but on this subject of pre-constuction/condo conversion these are things to consider...
I was curious about the details of a 24 month leaseback. Could someone explain how this works?
Regards,
Brad
The developer offers a 24 month leaseback which is equal to 15% of the sales price. So lets say i bought a unit for 500K, at contract i put 10%, but i finance for 100%, at closing i get this overage back (i do different types of financing depending on the unit i purcahse, some 10%, some with my IRA, some 100%). Within 30 days of closing i get a leaseback for 75K, where as the developer is not my tenant for the next 24 months (he is revnovating and addeding ammenties during this time). He is also put vacationors into my unit to recoup as much of the 15% as possible, well i know that he makes well above this, but i dont care because 2 things. I already have my 2 years of payments up front (this leaseback covers my mortgage, taxes, HOA, Club fees, insirance, and utilities). The develper is also creating a rental history during this time, which preludes to my precious comments on an exit strategy. When i get close to the end of the leaseback i can sale it for the appreciated price ro put it into a rental program (i can do this myself, use another PM, or use the developers onsite PM at which they keep 30% of the rent, this is common cost, so why not use them). I buy as part of an inside buying group, so i am always purchasing below appraised value, a purchased at $300sq ft. appraisals before the renovations and ammenities being added are $450-$465. I have been with him for 5 years now, and historically the appraised value after completion has been awesome, he can not guarantee butbased on past trends looking at $600-$650sq.ft. So if he never lifts a finger to renovate or add ammenities i still can resale to the current appraised value, but the develper has invested interest as well as he has given me 15% the sales price....hope this helped?
Exactly what condition are the condos in when purchased? Am I correct in gathering that the risk involved for the investor is that the developer will complete the construction after purchase?
Regards,
Brad
Quote:
On 2005-04-18 08:53, ttime wrote:
Does anybody know of the best wat to locate pre-construction deals? I seem to locate them a little too late, when the cost has already appreciated, or the have already sold out.
Do you search for developers in the area who have a tract record and contact them?
Do RE agents usually have early notice.
Would the local building dept. or Chamber of Commerce have info.
ttime,
Go to the municipal office and get a list of the properties that are going through subdivision approval. You can also ask to see the ddevelopment files which will give you contact info. This research will tell you who is planning to build how many of what in which area and the status of the approvals on the project. You can then contact the builder/developer about the proposed project.
Nancy
Does anyone have knowledge about the Gulf Shores/Orange Beach, Alabama coast.? I hear the condo market is pretty strong down there and single family homes near the beach are selling for 2-3 times pre-construction prices about 6 months after completion.
Quote:
--------------------------------------------------------------------------------
On 2005-04-18 08:53, ttime wrote:
Does anybody know of the best wat to locate pre-construction deals? I seem to locate them a little too late, when the cost has already appreciated, or the have already sold out.
Do you search for developers in the area who have a tract record and contact them?
Do RE agents usually have early notice.
Would the local building dept. or Chamber of Commerce have info.
It really depends on your stategy as well. Some investors will buy and flip for small profit so if you get a GOOD realtor they can watch the mls for these. It can be very difficult to get in on the very begining of a great project but if you are willing to hold(close) then you can pay the investor their profit and still make alot of profit for yourself. Talk to realtors, developers, the chamber, surf the net and register with those projects your intrested in, and dont be scared off of resales. 6 months ago i bought a 1/1 gulf front from an investor for 329,900 and sold in on the mls 2 weeks later for 429,900. Now the investor i sold the unit too put in back on the MLS for 529,900 he will have to close on it furnish prob rent for a while but he will get it! I would have closed on this unit as well but im already looking at buying 3 units in this same development.
The internet can be a very powerful way of getting into deals . I registered late one night for a project and forgot about it. 12 months later the marketing guys called and asked if i was still intrested. I will be buying before the realtors get them (with the developer increase) to sell to the public.
Quote:
On 2005-04-14 15:54, cbrechbill1 wrote:
I have purchased several of these mainly becuase i get in below appraised value and the developer offers a 24 month leaseback which is equal to 15% of the sales price..
I reside in lee county also and would be very interested in discussing more about this with you - can you contact me? Betty - **Please See My Profile**
which condos are you specifically talking about that has the 24 month lease back option, if you dont mind? would love to get my hands on a good piece of property!
His concept is to build a netwrok of resort clubs that will have reciproacting benifits to its members. Currenlty has projects in Clearwater, Sarasota, Las Vegas (first non waterfront project, but with appreciation being so strong, this is a good project), Marathon, Islandmorada, Tavaneir, Nassua and then 2 more in the keys at the end of the year. Feel free to contact me as, i can not put a link to his website on this forum, it will be blocked
Thanks for the apology, and like i tell everyone. Every investment has to be a single decision based on credible facts and individual research. My advice is free and i always say take everything with a grain of salt. I tell everyone like it is, i have heard of other areas and tell them to consider all options. Due diligence is required to be a success at anything. Best to everyone![ Edited by cbrechbill1 on Date 05/18/2005 ]
You are welcome and Good advice on do your own due diligence.
their is a lot of conversoins and new construction going on in myrtle beach. However, if you are using this as rental property it will be hard for you to make enough money to service your debt. If you are going to hold onto it a short time and resell, you will have a tremendous amount of competitio.
There are other opportunities in SC that are more profitable. If you are interested let me know and i will get you additional information.
jan maybe you can help I am not in position for these espensive beachfront proeprties but I would love to get my foot in the door on something that has potential to increase in value.
I appreciate it I am just looking to get my foot in a door. My payment would be steeper than yours since my lown amount would be double, factor in the 20% pm i will have a negative flow. Any ideas on a break even situation?
Why would your interest rate be double? Mine was 2 years ago at 7.25%...
Jan
very interesting tell me more about the $2000 deposit 100% financing situations price range $140-$175 I am very interested in that situation. I have heard of similar situations so those more informed please help us out.
I like the potential in Myrtle Beach. Anyone have experience with ocean front conversion programs?
Thank you to everyone who has posted comments on this thread. I have enjoyed reading the comments, and learned a lot. Unfortunately, TCI does not have a pre-construction forum right now, so my question to all of you is where do you go to communicate with like-minded pre construction investors?
Hi-rise in Vegas, Aqua Blue, bites the dust. Preconstruction is one BIG gamble. The builder was strong, but the construction costs zoomed +50% from the deposit stage to contract stage, and it no longer penciled out. According to government, there is NO inflation, yet here we have 2nd pre-construction condo failing. I recommend buying what you can see, or build it yourself, and trust no bodies construction cost figures.
[addsig]
I would like to know the zip code of the Mytle Beach area that is going up so fast. Here is a website that tracks the median price of all zip codes in US. I have found this is a good way to verify some incredible claims
http://www.melissadata.com/ssl/HomeSales.asp
Check these zip codes and let us know how you analyze the data: 29577, 29572, 29582
I live in Arizona and they are putting up a lot of lofts in the downtown area but I think they are making people bid on the new ones going up. Havent put any intrest in the lofts but I know there a lot of them being built
[addsig]
As both a real estate agent and investor in Las Vegas high rise condos it really pays to do your homework on the developers and their financing before putting your money or your clients in a project. I personally love the condo hotel projects as we have a severe shortage of hotel rooms in Vegas. My absolute favorite is the Cosmopolitan as it has by far the best location and will have very few real hotel rooms so the hotel management company (the Grand Hyatt) should be very competitive on its splits with the owners. The project was totally funded before they sold the first unit and now they are getting ready to release the second tower at the end of this summer. The second tower is right on Las Vegas Boulevard with amazing views and the pricing will be WAY lower than either of the Trumps, Ivana or Donald! If anyone wants more info or to get on the priority list for the second tower just email me - I am a VIP agent in this project and have sold more units in it than any other agent in town (plus I am buying two for myself!)
There are also a couple of other really good projects going up - one is Streamline Towers downtown in the new "gas light" redevelopment district (totally funded and backed by Barclays) and OneLas Vegas on the "New Strip" that is developing south of Mandalay Bay. And Streamline Towers will allow their contracts to be assigned.
I am also looking to get into the Myrtle Beach market for myself. I prefer true beach front - suggestions anyone?
My name is Brent and I am new to this so please bare with me. I have never invested and I have 3k to use for my investment. Does anyone have a clue on where to begin looking for preconstruction investments that have a reservation fee this low. I have been encouraged to get group of people to invest with me but that is easier said than done. Seems like there would be alot of people out there like me but the problem is finding them. Please advise.
“Which condo should I buy?”
Know your exit strategy. Buy from a developer that will be there for you when you want to sell your condo. If the developer is not helpful to investors now, how do you think he will be when you want to sell?
Know what your competition will be and prepare for it. Read my article about negotiating.
Here are some tips:
Buy unique. This means the top, the end, the view, the premium. When it comes time to sell you want less competition for your unit.
Improve it. Resist the temptation to do no improvements. Put in the larger tile, the granite, the mirror wall. These improvements will pay off later.
If you can – do the backgrounds (paint, wallpaper, drapes) and furnish it.
Ask the developer if he will help you sell it when you want you are ready.
Some other things to look at:
Parking. Is there enough? Is it convenient?
Garbage. Where is the chute? How will the dumpster be emptied? Is it near your parking space?
Storage. Is there any?
Warranties. What are they?
Who is the management company?
What appliances are included? Washer and Dryer?
Is there a guest apartment available for you to use?
Who is the builder?
READ THE CONDO DOCS.
Can you put shutters on?
What will traffic be like?
Here is more about Leasebacks:
Model Lease Backs - How do they work? Often a developer will offer a "lease-back" on a model in their community. Let me review this option for you and you can decide if investing in lease backs is right for you.
What is a "lease-back"?
The developer will sell you a model and at the same time, offer to rent it back from you for a specified period of time (This is normally for one year).
Why will a developer do this?
There are two reasons. The most obvious is that the developer will need a model to show off his units and rather than tie up his cash and leave a model unsold to keep it in his inventory, he will sell a unit and rent it back from the seller. He is able to list this model as a sold unit for his financing and he gets his money at closing. Furthermore, the cost of renting from the buyer is a marketing expense.
The second reason a developer will offer to lease back a unit is to stimulate sales. While he may not actually need all the models he is leasing back, the economics may work out well for him, especially if he has many more units he wants to build.
Describe a "typical deal"
You may hear an offer, "Model Lease Back at 7%." Here is what this means; the developer will offer a model at $500,000. You buy this unit using their normal procedure (whatever it is) and starting at the closing date, the seller becomes the tenant and pays you 7% times the purchase price divided by twelve each month($35,000/12=$2917.00).
Is this a good deal? My short answer is YES. Of course, it depends on your objectives and why you are buying the unit in the first place. If you are buying because prices are on the rise and you do not need to move in right away, this is an excellent way to hold a unit.
What are some of the variables or "negotiating points"?
Of course, it is always a good idea to have a knowledgeable agent (like me) negotiate the deal for you. Often you are dealing directly with the community representative who will tell you what the lease back arrangement is, period. Remember, he works for the developer, get someone in your corner. Here are some of the items you need to look out for:
1. Is the furniture and background (decorating) package included in calculating the leaseback percentage?
2. Who will pay home owners fees?
3. Who will pay taxes?
4. Can you finance this unit based on the income projected?
5. Can you get LIBOR interest only financing?
6. Who will pay for insurance and what will that cost if the home is actually used as a model?
7. Who will maintain the home and how will they maintain it?
8. Will you get new carpet when you take over?
9. Will the unit be repainted?
10. Can you sell the model early?
11. What is the term of the lease?
What do I look for in the numbers?
Cash on Cash return and Appreciation are the two main factors. Cash on Cash return is the amount of CASH you get every month as a percentage of the total CASH you had to put in at the beginning of the deal. My last client got over16%. Appreciation is the amount you forecast the home will rise in value during the time you lease it to the developer. Look at this example:
Purchase Price $1,850,000
Down Payment $370,000
Acquisition Costs $53,250
Credit at Closing $28,892
Total Cash Investment $394,358
One Year Return on Cash
Gross Rent $129,500
Less Carrying Cost $44,000
Cash Return $85,500
Investment $394,358
Cash on Cash return 21.68%
In the above case, even if the buyer sold the unit a year later and just got his money back, it was an excellent deal.
GFOUS.........Good info......Thanks for the info......Is it okay to contact you if I need additional info/ guidance.....may be interested .......
I would be happy to be of help.
It is best to ask questions on the forums so that all can benefit and comment
Gregg Fous
Pres/CEO Brixton Development
Anybody investing in Bahama Island Resort in Myrtle Beach. A friend of mine just bought a unit and he referred it to me. Any info would be helpful??
What areas are you looking to rehab? I can be on the lookout for you in So. CAL.
I have a rental in Denver, and one in MT. I am looking to build a rehab team of trusted workers/ to supervise and share in the profits of a rehab whereever the rehab project is located in the country.
For a great profit deal, would you be willing to live in a rehab home while working on it out of state?
Colin
Colin
EPINVESTOR,
How long have you been investing in the Green Acres area?
I am taking a trip down around your area, West Palm Beach. I am going down there in about a month.
Do you know of any pre-construction deals coming through there in the near future? Do you happen to know anything about the foreclosure market in your area?
Any help would be greatly appreciated, seeing as how I am from Ohio and I know nothing about that area.
Thanks,
Gusty