This Would Be A Straight 100% Annual Return For The First Year On The Investment

Category: Finance, Real Estate.

Preconstruction real estate investments are investments in yet to be completed construction projects. May be even more.

Completion may still be six months, a year or two years away. An investor is able to put in a small deposit to book/ hold a condo or apartment in the project till it is complete. The preconstruction investment is found quite lucrative to most investors on account of its simplicity and low risks. He can then sell the property to capitalize on the price appreciation from the date of investment. Since the investment is small and has to be made in cash, there are no mortgage related hassles or expenses. Preconstruction investment in Miami is of particular interest on account of the rate of appreciation in property prices over the last few years. There are no taxes involved and the investor just needs to sit tight and keep a watch to see that his investment keeps growing with the appreciation in real estate prices.

It has been observed that the average rate at which real estate prices have been rising annually in Miami has been close to twenty- five percent. And the absence of mortgage related issues means that a developer will sell a preconstructed condo/ apartment unit irrespective of credit history ratings. In the case of an investment in a constructed house for rental income, there is no need to manage tenants in a preconstruction investment. On the basis of available figures it is safe to assume that investing$ 100000 in a$ 500, 000 condo in a preconstruction stage project in Miami can net in$ 100000 in price appreciation in one year. Therefore a condo priced at$ 500000 will require a down deposit of$ 100000. The down deposit required by the developer in a preconstruction property is around 20% . Half to be paid at the time of contract and the other half at the beginning of construction.

This would be a straight 100% annual return for the first year on the investment. Based on a conservative estimate of 20% annual appreciation in real estate prices as per current trends, the under construction condo would be worth$ 600000 after one year. Simply stated, the capital invested would double every year. Waterfront property is the most in demand, being preferred by such buyers including those from States like New York and California and others. Preconstruction investment is especially attractive for Miami real estate because of the influx of large number of people into Miami including buyers from outside the US interested in taking advantage of the flexible rules available to foreign nationals who want to purchase Miami real estate. Instead of rushing headlong in a preconstruction investment, it is very important to gain detailed information before making the actual investment.

A project may not be well analyzed or priced right. This is because every developer or every property is not desirable from the investment angle. Therefore it is best to seek the services of a local realtor to overcome such difficulties while making a selection for the investment. Talking directly to the developer or his staff may not yield objective information.

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