I’m Eric Lanigan with Lanigan and Lanigan Attorneys in Winter Park.
I’m going to talk just for a minute about how to buy off plan Florida real estate or pre-construction. Now like so many other things in life, it can be great or it can be a nightmare.
You may want to watch the video “How to Benefit from Buying Off Plan Florida Real Estate,” on our YouTube channel.
Buying Off Plan Florida Real Estate
But let me explain to you essentially what buying off-plan is. It’s buying a condominium or a home in a project that is not yet been built. You should know how to benefit from buying off plan Florida real estate.
It’s very common in the U.S. for builders to offer properties, specifically, especially condominiums, at deep discounts if you’ll enter into the contract before the project begins.
Developers Want to Pre-Sell Projects
It helps their financing in terms of their construction financing and obviously any developer is going to want to pre-sell their project if they can. So they’re willing to give significant discounts upfront which from what would be the ultimate selling price of the property.
Now if the market is rising and prices are rising this can be very profitable. For example let’s say you’re buying a unit that costs $100,000. Just to use round numbers so you put 5% down so that’s $5,000.
And the balance is going to be paid in five years when the project is finished.
Well if the project goes up 10% a year it’s basically now worth $120,000 at the time that you close so your $5,000 initial investment is now worth $20,000 if you were to sell the contract so you can have a significant profit right from the beginning.
Be Sure You’re Buying in a Good Market
Like anything else though the key there is are you buying in an active rising market? Because obviously if the market is going in the other direction you could find yourself holding onto a contract that nobody wants and maybe a contract on a project that never even gets built.
So having extensive research on the project and knowing the area is vital and critical before going into any off plan investment.
Benefit to Off Plan Purchasing for Foreign Investors
Now if you are a foreign investor there is a practical benefit in this type of off plan purchasing. And that is if the project doesn’t work out and you refuse to close, you’ll obviously lose your deposit.
But is a developer really going to take the time and expense to go after a offshore foreign investor to try to recover some amount of money because they didn’t close on the contract.
The answer to that almost always is never.
Again, I’m Eric Lanigan, Lanigan and Lanigan attorneys Winter Park, Florida.
