Buying a pre construction Miami condo is an exciting proposition that needs to be planned and approached diligently. When you choose to invest in a development before its construction, you are investing in a vision of the completed project based on blueprints and web, video, or in-person presentations by the developer. Yet, pre-construction projects offer deep discounts to buyers so they can attract financing. You also have the opportunity to be the first owner and have your first choice of floor plans, making the idea of buying pre-construction an attractive option. Here are some of the major things you need to know when buying a pre-construction Miami condo:
Get in Early
The developer wants to create hype around the project to attract financing from banks and investors and attract more buyers, so getting in early on a project offers you several advantages. Signing early typically allows you to get the deepest discounts that the developer will offer, often referred to as "first tier pricing." In the early stages, you do not have to buy the condo, but instead, you will place a deposit on the unit of your choice. Deposit requirements are low and you have the ability to cancel without penalty during the earliest stage of development. You will also have a wider selection of units when you get involved early, giving you the opportunity to choose the condo that fits your needs. It's in your best interest to have a reputable broker for this process. Not only will they guide you through the process, but they have access to "friends and family" releases and will ensure that you have access to first tier pricing
Select the Perfect Condo for Your Needs
When you choose to invest in Miami buying in a new development, your purpose, lifestyle, and budget will factor into your decision. Here are some of the things you will need to consider when selecting the perfect condo for your needs:
- Neighborhood—Each neighborhood in Miami has its pros and cons when buying real estate, so you need to decide which one fits your desired lifestyle by asking questions such as: Do you want to be close to all of the action of Downtown Miami or South Beach or do you prefer to be in a quieter area like Coconut Grove? Do you need to be close to the airport because you travel frequently? Is walkability important to you—that is would you like to be able to walk or use public transportation everywhere you go?
- Proximity to Water—How close you are to the water speaks to the kind of lifestyle you want to have in your condo. Waterfront buildings and those that are close to the water offer resort-style living that includes easy access to the beach and opportunity for watersports. Some buildings even offer private boat slips or the use of a day yacht. All things being equal, units in waterfront buildings will often cost more than those that are not on the water.
- Developer—Your choice in developer is directly related to the risk level of an investment. Established developers with proven track records are more likely to secure financing and complete a project without straying too far from their vision. Are you seeking a reputable developer who has already built properties in Miami, or are you comfortable taking a chance on a new name? If your developer hasn't built anything in Miami, where else do they have properties?
- Building Amenities—Pre-construction condo units in Miami offer a wide variety of amenities in each building. At least one pool is standard, but luxury apartment buildings in Miami often have more. Similarly, a fitness center and concierge are also standard. If you have children, you will want a building that has a children and/or teen area. What other amenities are important to you? Do you want access to dining in your building—some projects include restaurants run by world-class chefs? Do you want access to beauty services such as hair and nails and spa services? You will even find pet spas and services in some buildings.
- Location in Building—The higher the condominium is in the building, the more likely it will have unobstructed views of the city, the Atlantic Ocean, and/or Biscayne Bay; however, these views come with a price tag. Generally speaking, condos on the highest floors of a building cost more. Depending on the layout of the building, you may have spectacular views on all floors
Use the Project Timeline to Your Advantage
Purchasing preconstruction condos in Miami is different than purchasing a residence that is already completed. Whether you are an investor looking to rent out your condo or using it for a residence, you need to have an understanding of the Pre-construction project timeline, so you can use it to your advantage. A condo development project generally has four phases: reservation, contract, construction, completion.
The reservation phase is the earliest phase of the project where the developer is still making plans with the city and state and the building only exists as a vision in blueprints and other renderings. As previously discussed, developers offer the biggest discounts in this stage. This is especially advantageous to investors who are looking to buy multiple condos to add to their rental portfolio because they can leverage their capital with low deposit amounts. During this stage, the purchase price has been secured; however, your monies are still refundable if you decide to cancel.
Once the developer has received approval from the local and state governments regarding the offering plan, they will deliver the purchase agreement to any who have reservations. After you sign the contract, you will enter into a right of rescission period, in which you have 15 days to review the contract and all other materials before your deposit is no longer refundable. Typically, you will have to pay another portion of a deposit when you go under contract. If you are getting in on the project during the contract phase, your initial deposit will be higher and it is most likely that the developer has increased prices by this time. During the contract phase prices are still well below market value, but you have greater certainty that the project will be completed.
Once the developer breaks ground on the project, construction of most luxury high rise buildings last between 18-24 months. Things such as weather and labor issues may cause delays on occasion. Those who got in early on the project will usually watch their values rise during this time. As construction continues and the developer reaches certain milestones, you will often be required to provide more of a deposit.
When the project is completed it must pass all inspections, then it is time to close on your condo. You will take ownership and occupancy if you plan on using the condo as a residence. If you wait until the project is completed, you will get to see what you are purchasing before you buy, but you lose most of the financial benefits that come from signing on early. Investors who made a reservation and signed a purchase agreement early in the project timeline often times close with tens of thousands of dollars in equity. Reselling your new condo at or near market prices upon completion may be very lucrative.
Use an Experienced Realtor When Buying a Pre-Construction Condo in Miami
The best thing you can do for yourself when you buy a pre-construction condo in Miami is to use an experienced realtor. Skilled agents can guide you on selecting developers, buildings, and neighborhoods, but one that specializes in pre-construction condos will help you use the timelines to your advantage as well as introducing you to projects where first tier pricing is still available. Also, a reputable agent has a strong professional network that may allow you to get in on new projects before others know about them. Contact us for more information about purchasing a pre-construction condo in Miami.