Preconstruction

Thomas S. O'Rorke

REALTOR®

Licensed Real Estate Broker

ALABAMA

FLORIDA

KAISER REALTY, INC.

Gulf Shores, Alabama

Toll Free • 877-854-8843

Direct Line • 251-981-1221

Cell • 251-942-7089

Fax • 251-955-3203

Email • Tom@BeachBuys.com

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PRECONSTRUCTION

New developments here on the coast have come to a standstill. The depressed real estate market here and throughout the country has virtually killed all new development. Many developers have pending projects but all are now on hold.

Prior to the decline in the market, development of the standard condominium in the beach environment was evolving. The typical one, two or three bedroom condominiums were no longer being offered in great numbers. Prior to the economic downturn, the past few years had seen land coast soar. With little undeveloped land and the land that was available selling at extreme prices, developers built larger and ever more luxurious units in order to justify this high land cost. The preconstruction "deals" of yesterday were still available but the stakes were significantly higher.

Instead of putting up say, 10% to 15% earnest money on a $300,000 condominium a buyer had to put up 20% on a $!,000,000 condominium. This is a down payment that would be difficult to walk away from. The idea was to resell or "flip" your preconstruction unit for a nice profit.

Unfortunately, many found that several other buyers in that building wanted to do the same, and buyers found they could not sell it. Times have indeed changed. The hard fact is, prices have come down, not risen. We are now in a strong BUYERS' MARKET. Buying preconstruction to flip is extremely risky and not recommended

In better economic times, purchasing a condominium prior to the commencement of construction of the building or possibly sometime prior to its completion, can be a smart way to enter our local market

if you are buying it for your own use and/or as a rental property. It is not however, without disadvantages. You must remember to factor in the cost of furnishing a preconstruction unit. While it will come with all appliances including a washing machine and a dryer, the new owner must buy the furnishings and the window treatments. In most cases you must also wait about one year for the building to be built.

How about positive's? Are there any? Very much so. You are getting a spanking new product and it will be furnished exactly the way you want it to be furnished. In most cases you will have a much broader selection of units within the building and therefor have a better chance of getting just the floor you want.

With the current market, all of this is simply an exercise for the future. That’s when we will next see preconstruction units.

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