Comments on: Pre-Construction Real Estate Investing http://www.cmeconferences.org/pre-construction-real-estate-investing.html and other Real Estate learning resources Mon, 01 Dec 2008 01:39:28 +0000 hourly 1 http://wordpress.org/?v=3.0 By: Paul Sothebys http://www.cmeconferences.org/pre-construction-real-estate-investing.html#comment-571 Paul Sothebys Sat, 15 Nov 2008 05:25:32 +0000 http://www.cmeconferences.org/?p=62#comment-571 This may have been a great way to make money in the 2002 - 2006 boom but it has not been working in my local market for two years and I expect it to be a while before new construction flipping is going to be a good investment again. We have developers going bankrupt and leaving half built communities left and right. There are indeed some great deals out there but Buy and Hold seems to be what will work in 2008 - 2009 This may have been a great way to make money in the 2002 – 2006 boom but it has not been working in my local market for two years and I expect it to be a while before new construction flipping is going to be a good investment again. We have developers going bankrupt and leaving half built communities left and right. There are indeed some great deals out there but Buy and Hold seems to be what will work in 2008 – 2009

]]> By: Julie Anne Barrington IL Realtor http://www.cmeconferences.org/pre-construction-real-estate-investing.html#comment-559 Julie Anne Barrington IL Realtor Thu, 30 Oct 2008 14:05:48 +0000 http://www.cmeconferences.org/?p=62#comment-559 Great Article! This is not an investment route for the timid. I have investors that made it big and some that have lost quite a bit. As long as they know it is risky going in. As agents we can help our clients in sharing with them what the risk level is in our opinion for each investment they are considering. Julie Anne www.deerparkbarringtonrealestate.com Great Article! This is not an investment route for the timid. I have investors that made it big and some that have lost quite a bit. As long as they know it is risky going in. As agents we can help our clients in sharing with them what the risk level is in our opinion for each investment they are considering.

Julie Anne
http://www.deerparkbarringtonrealestate.com

]]> By: Sebastian http://www.cmeconferences.org/pre-construction-real-estate-investing.html#comment-547 Sebastian Fri, 17 Oct 2008 18:33:02 +0000 http://www.cmeconferences.org/?p=62#comment-547 In my market area of Vancouver, Canada we saw a lot of pre-sales in new construction over the last few years. In particular, the pre-sale condo market was incredibly hot. How hot? Well, we had people lining up for days prior to official openings, realtors paying students to stand in line and cowbells used to inform those waiting when the marketers raised prices once again. It was mayhem at sales centers. It didn't take weeks, months or years for a development to sell out but mere hours. What's it look like today? Let's just say that being a sales center sales rep would be a very lonely job right now. Not only has the market slowed drastically, but there have been a number of examples over the last year of some serious risks involved in purchasing pre-sales. As the market was turning, we saw a couple of developer's go back to contract holders and request more money. This was (so they said) because of increases in construction costs. The contract holders were faced with option of either paying more money or walking away from the contracts they'd held for a couple of years with their deposits. Now that the market is soft, we are seeing new problems arise. Initially, developer's were having problems getting enough pre-sales to qualify for their financing. Now, I am hearing that banks are changing the lending rules and requiring developers to put more of their own capital into the projects. We also just saw a major development (5 towers, 1,400 units, $350 CAD Million) shut down last week. The project has sought creditor protection because it lost it's financing completely. The problem? It was financed by Lehman Brothers which went out of business as a direct result of the sub-prime mortgage problems south of the border. In our market (<a href="http://www.sebastianalbrecht.com/vancouver_real_estate_blog/" rel="nofollow">read about the local Vancouver real estate market at my Vancouver real estate blog</a>), pre-sales is a dirty word right now. Only the strongest, safest and most-reputable developers are the ones that are worth considering right now. If you really want a new condo, first have your realtor help you consider one of the many that are about to obtain occupancy. All the best, Sebastian Albrecht In my market area of Vancouver, Canada we saw a lot of pre-sales in new construction over the last few years. In particular, the pre-sale condo market was incredibly hot.

How hot? Well, we had people lining up for days prior to official openings, realtors paying students to stand in line and cowbells used to inform those waiting when the marketers raised prices once again. It was mayhem at sales centers. It didn’t take weeks, months or years for a development to sell out but mere hours.

What’s it look like today? Let’s just say that being a sales center sales rep would be a very lonely job right now. Not only has the market slowed drastically, but there have been a number of examples over the last year of some serious risks involved in purchasing pre-sales.

As the market was turning, we saw a couple of developer’s go back to contract holders and request more money. This was (so they said) because of increases in construction costs. The contract holders were faced with option of either paying more money or walking away from the contracts they’d held for a couple of years with their deposits.

Now that the market is soft, we are seeing new problems arise. Initially, developer’s were having problems getting enough pre-sales to qualify for their financing. Now, I am hearing that banks are changing the lending rules and requiring developers to put more of their own capital into the projects.

We also just saw a major development (5 towers, 1,400 units, $350 CAD Million) shut down last week. The project has sought creditor protection because it lost it’s financing completely. The problem? It was financed by Lehman Brothers which went out of business as a direct result of the sub-prime mortgage problems south of the border.

In our market (read about the local Vancouver real estate market at my Vancouver real estate blog), pre-sales is a dirty word right now. Only the strongest, safest and most-reputable developers are the ones that are worth considering right now. If you really want a new condo, first have your realtor help you consider one of the many that are about to obtain occupancy.

All the best,

Sebastian Albrecht

]]> By: Curtis Reddehase http://www.cmeconferences.org/pre-construction-real-estate-investing.html#comment-543 Curtis Reddehase Mon, 13 Oct 2008 15:56:48 +0000 http://www.cmeconferences.org/?p=62#comment-543 I know that builders are offering some very good deals. What better way to have a rental property. A new home is the most competetive. I know that builders are offering some very good deals. What better way to have a rental property. A new home is the most competetive.

]]> By: Steve Simon http://www.cmeconferences.org/pre-construction-real-estate-investing.html#comment-531 Steve Simon Wed, 10 Sep 2008 14:09:11 +0000 http://www.cmeconferences.org/?p=62#comment-531 Of course if you invest in pre-construction real estate you could also end up looking at a bunch of overgrown (with weeds) lots with a few stems of PVC pipe sticking up out of the slabs, but nothing esle on them... These are now all over Florida! In my estimation, I think 3 to 5 years before they are absorbed and something gets built on them. That is a long time to wait for any return. Just my thoughts :) Of course if you invest in pre-construction real estate you could also end up looking at a bunch of overgrown (with weeds) lots with a few stems of PVC pipe sticking up out of the slabs, but nothing esle on them…
These are now all over Florida! In my estimation, I think 3 to 5 years before they are absorbed and something gets built on them.
That is a long time to wait for any return.
Just my thoughts :)

]]> By: Charleston SC Real Estate Agent http://www.cmeconferences.org/pre-construction-real-estate-investing.html#comment-525 Charleston SC Real Estate Agent Wed, 27 Aug 2008 17:09:26 +0000 http://www.cmeconferences.org/?p=62#comment-525 Is there any way to get your money back if the project does not get started? Do you have to take a total loss if the project is not completed? Is there any way to get your money back if the project does not get started? Do you have to take a total loss if the project is not completed?

]]> By: Viriko http://www.cmeconferences.org/pre-construction-real-estate-investing.html#comment-491 Viriko Wed, 06 Aug 2008 04:20:47 +0000 http://www.cmeconferences.org/?p=62#comment-491 Great article, provides a good insight of pre-construction real estate investing. I think that its a good investment, especially if you have the money and the developer has a good reputation. The main constraint is the time needed for the realisation of the property (development time, afterwards the time needed to either sell it or rent it out). Some developers require a point in the contract that states that the property can not be sold in XX period of time after the property has been developed. This is mainly to restrict competition between the home owner and the developer as possibly not all of the properties in that complex have been sold. Great article, provides a good insight of pre-construction real estate investing. I think that its a good investment, especially if you have the money and the developer has a good reputation. The main constraint is the time needed for the realisation of the property (development time, afterwards the time needed to either sell it or rent it out). Some developers require a point in the contract that states that the property can not be sold in XX period of time after the property has been developed. This is mainly to restrict competition between the home owner and the developer as possibly not all of the properties in that complex have been sold.

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