How to Benefit from Buying Off Plan Florida Real Estate

How to Benefit from Buying Off Plan Florida Real Estate


I’m Eric Lanigan with Lanigan and Lanigan
Attorneys in Winter Park. I’m going to talk just for a minute about
buying off plan or pre-construction. Now like so many other things in life, it can be great
or it can be a nightmare. 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. 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. 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. 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. 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.

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