Preconstruction condo short term/investing

I am a real estate investor, I am currently considering investing into a preconstruction condo at the beach. The condo is a 2-bed,2- bath and is 230,000 dollars. The real estate prices at this beach are changing daily (increasing as much as 10,000 dollars a week) I plan on selling the condo before closing next march 2006, but I am a little scared that the market will not be the same. Does anyone have any advice.

Are there other developments going up that challenge the resale of your condo? If you can not sale it, is there a rental program available to you to place the unit into? What has the historical trend been for waterfront in that area? What is the appreciation rate of waterfront over the past 10 years? Lastly, where is the property located?

well, this particular beach has had a dramatic increase in property values in the past eight months. The property values are sometimes increasing by the hour. All of the property values have increased between 85,000 and 100,000 within the last few months. For example a beach property lot 50’ x 120’ went between 95,000 and 100,000 three months ago. Today that same lot is 185,000. These are not beach front. The particular condos I am looking at are ocean view. Yes there is a strong rental market in this area, but I am not interested in that aspect.

I am a new investor and I am interested in preconstruction investment. Can you share with me how one is able to sell a house/condo before closing. When doing this does the property have to be recorded in your name first or is there another way to do it?

I am in Southern California.


In preconstruction (in the cases that i have done), i wont close on the proeprty i will re-assing my contract to someone who will close. Generally (again based on what i have done), i will place 10% down on the conract, and as the units are being built will then flip the contract over to the next buyer. The risk involved is i could potetially have to close on the unit, thus making payments. I have been very fortunate, that the developer and sales team i worked with, always found me a buyer. The key is developing the correct strategy for positioning yourself with a potential buyer, in most cases the simpliest of explanations is the correct one, purchase a unit with higher demand than another (i preferabbly pick 2/2 with some sort of waterview, or near the ammenities). The thought of purchasing the least expensive house in the nicest neighborhood (meaing purchase next to the most expensive house) does not always work in this situation. I certainly hope i did not muddy the waters, this is a post before coffee :stuck_out_tongue:


How do you figure in your profit? Is it a percentage of the amount you put down to hold the unit, or a percentage of the value of the finished unit itself?


I’m a new investor too. I live in the DC metro area, and the builders increase the base price every 3 properties sold. However, they have recently started making you sign an addendum that you will live in the property for 2 years before you can sell it. Any suggestions on exit strategies for this market?

How do they plan on enforcing the addendum?

I believe that a 2-year occupancy addendum would be difficult to enforce. What would happen in the event of a job transfer?


I see your point.


I have seen this posted before. The consensus is that it is virtually unenforceable.

I cannot foresee any court (well, except that you ARE in the DC area!) finding against someone that sold a property that THEY own because the developer/builder didn’t want someone else to make a profit!

I may be wrong but I don’t think so…the expense of hauling you into court, along witht he negative publicity that you could stir wouldn’t be worth the cost/trouble.

Just my 2 cents – I’m not a lawyer (nor do I play one on TV!)…


I calculate capital appreciation on-preconstruction…6 one way half dozen the other ;D