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Preconstruction - WHAT  YOU NEED TO KNOW

Pre Construction – Getting Started:
Here you'll find a collection of valuable information to help you get started.

Cancun and the Mayan Riviera New Construction market is exciting. If you think this area is just for retirement, think again. Of course, we have had an influx of educated and wealthy people relocating to Cancun and the Mayan Riviera from Latin America, Caribbean, Europe and the US to enjoy our beautiful sunshine, ocean and life style at affordable prices.

I believe if you BUY RIGHT, you can be ahead of the crowd and limit your risk.  So, this site will attempt to give you that edge. This site will help you with your decision to find the opportunity in the right area, with the right developer and most of all "The right price"

Developers faced with many challenges when starting a new development.  They have to prove to the lender (financing their project) that there is enough demand for their project. In fact, most lenders require that the developer sell a certain percentage of the project before the lender approves the project.  As a result, the developer has to entice buyers to buy early by providing special discounts to early buyers. Typically, you reserve a unit by placing a deposit ($5,000 to $50,000 depending on the project) with the title company to hold a particular condo. In each stage of the construction, the developer would raise prices (in most cases). This encourages people to buy early – because prices are going up, and it is a self-serving prophecy – buyers see the price of the unit going up, they want to get in on the increases, it creates more demand – and indeed may increase values of the pre construction units. In a very dynamic real estate market like Cancun and the Mayan Riviera market, this practice started a new kind of investment referred to as "Pre Construction Investing" or sometimes-called "Flipping".  Flipping: is where an investor reserves a unit in a new project in earlier stages, then he/she FLIPs or ASSIGNs his/her unit to another buyer for profit since the unit appreciated.

Investor doesn’t want or cannot resale his unit before closing.

Then he goes to closing (with easy access to financing when 20% has been put down) and has all the time he needs to resell a new unit at a price locked in 2 years before in a market that has appreciated in the meanwhile.
 
Pre-construction investment principles:
Most people are aware of significant income potential via investment real estate rental and appreciation, but many people believe that significant investment property appreciation can only be realized over a long term period. Investing in pre-construction projects offers investors the opportunity to purchase property below market price and realize significant investment appreciation upon completion of construction. Such opportunities are most widely available for large-scale real estate developments such as condominium complexes.

This is how it works:

1. Reservation Phase:
In order to obtain financing, developers must prove that a demand exists for the proposed project. They create architectural renderings and floor plans and begin to pre-sell units at a greatly reduced proposed price. Prospective buyers hold a "reservation" on a particular unit with a token down payment, usually 10% to 20% of sale price which is placed in an escrow account. The "Reservation Agreement" is revocable at any time for any reason and upon written notice of cancellation; the investor receives a full refund.

2. Contract Phase:
Once the developer has the required number of presale reservation agreements, "condo docs" are recorded with the public register and reservation holders are sent a copy of the docs along with "hard-contracts" which require a down payment (usually 20-30% of sale price) .

3. Construction Phase:
Construction can take from approximately 8 months to 2 years.
Your contract will have an expiration date upon which you are entitled to a refund of any deposits if the developer has not completed construction. Once you've gone to hard contract, no additional money is required, except for upgrades until completion of your unit.
During this period, you will most likely see several sales price increases as completion nears.

4. Closing Phase:
Once construction is complete and if you have not assigned the contract, you will be expected to close on the unit. If you don't, you forfeit your down payment.
For this reason, it's advisable to locate a lender and get pre-qualified prior to the completion of your unit. Closing proceeds much like any other real estate purchase. Additional expenses such as association fees,etc, are disclosed in a "good faith estimate". At closing, depending on your choice in markets, you can actually leave the table owning a condo with significant equity and some money in your pocket.

Do I make money if I only buy on Day One?
NO. There is an appreciation in each stage. For each stage, you can make profit.  So, the earlier you buy the higher the profit. However, if you missed day one do not write off the opportunity.  There is an increase when you go to contract, another when they break ground, and typically when percentage of the building has been sold.  So, I found that you could see appreciation every month as the closing time approaches.

Pre Construction – How to Sell (Flip)? How do you sell your condo?: Selling the condo prior to having to close on it, you have two choices - If the developer contract allows you to assign the unit (some developers prohibit assignment of contracts), then you can assign the contract. However, keep in mind that in some cases the developer charges a fee (assignment fee) for that service since they have to change their paper work for the new buyer.
If the developer contract does not allow you to assign the unit, you have the options of DOUBLE CLOSING. Double closing is two simultaneous closings, one where the title is transferred to you from the developer, and the other one where you transfer the title to the new buyer.

Pre Construction – Costly mistakes and how to avoid them?

Ensure your view is protected. Can you imagine buying your condo with breath taking water view to find out sometime later that another developer is building and will block your water view?  You'll lose a lot.  This will require the expertise of an experienced local realtor that is familiar with new construction plans,  zoning and the city regulations to give you this edge.  Be prepared to close if you have to.  If you can't close, you can lose your deposit.
 
Get an experienced realtor to do the right research.  Have the right team on your side.  You need realtor, lenders, and real estate attorney that is experienced with Pre Construction investments and flipping.   I can provide you with the right team to ensure smooth transaction.

Here is what the information you need:
Price Range Analysis – What price ranges are available, what areas, what build times, etc.
Days On The Market & Sold Analysis – What is selling and how long does it take to sell new condo, holding costs, etc.  Appreciation Analysis – How much is the appreciation % - based on area, type of home, price range, etc.
 
WE GOT CLOSE CONTACTS with Major developers to be the first to know (VIP BUYER).
Will share insights and information you won't get from any one developer.  I'll save you the time it would take to talk to them all, and help you make objective comparisons as you decide with confidence which new construction project is right for you.