Small Children and Buying a House

by | Buying Real Estate

Small Children and Buying a House

First Time Home BuyersBuying First Home

The old cycle of first-time home buyers purchasing a small house or condominium as the first home, birth of children and outgrowing the first residence and looking for a larger home is greater in today’s lifestyle than ever. While the cycle continues with buying bigger homes as the family grows and ends with downsizing perhaps to a condo again.  The role of a real estate professional remains the same throughout the entire cycle. The last phase of this cycle perhaps could be the first stage of the cycle and back to the condo lifestyle especially when parents become empty nesters.

The criteria for buying a new home in each phase of this cycle are as diverse as the people engaged in the cycle. Buying a house with small children is a perfect example of how such criteria could be defined totally different from others, for example from the homebuyers looking to downsize.

Their journey begins with the birth of the first child and the need for an extra bedroom as well as the play area for the child, which normally means graduating from condo life to living in a single family home. The need grows as the number of the children increases. To start the process, the parents need to save enough money for a down payment and closing costs that are associated with purchasing of a house. Meanwhile, a list of wants and needs grows longer to cover all future needs of children. The location and type of neighborhoods normally top this list, followed by the safety, the quality of the schools, the proximity to the parks and playgrounds and other amenities that are geared to accommodating children.

After establishing the criteria for the purchase of a house that matches most of their needs it’s time for house hunting. Our experience has shown that many of these first-time home buyers have little to no strategy about locating their ideal home. While many comb through local newspapers the others drive around looking for for-sale signs to call. These methods of locating a home most often results in wasting valuable time or engaging in bad deals that are a direct result of lack of representation by a professional real estate agent, or the safe and most cost effective method.

All Realtors working in the State of Florida are licensed professionals that are sworn to follow the Realtors Rules of Ethics. The Florida Real Estate Commission, also known as FREC, is the governing body that oversees the conducts of the Realtors and Real Estate Companies. They are also responsible for compensation granted to consumers who have faced financial damages due to the misconduct of Realtors or real estate companies. Considering all that, some home buyers still ignore services of a Realtor even though in most cases there are no costs to homebuyers for such services. In Florida, the sellers pay all commissions for the sale of their properties and, since the majority of the Realtors are considered to be Transaction Brokers, there is no commission or any other costs to home buyers for real estate services by Realtors.

Employing the services of the real estate professionals could help families in both processes of selling their existing residence and purchasing of the new home. Since in most cases the homeowners need the proceeds from the sale of their home for purchasing of their new home, the processing of both contracts at the same time proves to be a tedious task that requires the expertise of a Realtor. To accomplish a timely and smooth transaction the use of the same Realtor to handle both transactions is very crucial especially when it comes to close on both properties simultaneously.

The process of a double transaction begins with the listing of the existing home, followed by looking for a new home. Parents should take the time to explain the process to children while emphasizing the importance of having their rooms picked up and looking neat at all time. During this period, most often than none, the children face the anxiety of losing their classmates and friends and offer resistance to any change to their environments. It is the parent’s duty to understand their feelings and have a plan to work the problems out with their children without becoming combative and hostile. They could accomplish this with a little planning during the next phase of their journey in purchasing a new home, which is the house-hunting phase.

While the potential buyers are in and out of the current residence the process of locating that ideal home has also begun. It is an exciting and at times disappointing days when parents face challenges such as lack of showing, low-ball offers and other obstacles in the sale of their home, considering that all this is happening while they are also trying to find and negotiate on the new home. During this period, it is of most importance to get the children involved in the process of finding a new home. This will allow them to appreciate the advantages that the new house offers and reduces their resistance to such changes. A bigger bedroom, more bathrooms, large backyard or a swimming pool are enough reasons to entice the children to join their parents in making the dream of home ownership come true.

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Sensible Approach to Buying Real Estate

by | Buying Real Estate

Sensible Approach to Buying Real Estate

Port St Lucie Homes for PetsBuying Real Estate

While for our parents buying real estate meant a once-in-a-lifetime venture, the average family in today’s market moves every 7-8 years. Purchasing of real estate also means to commit the largest investment for any average family, regardless of how many years they plan to stay in the new home. For an investment of this size, there is no room for guess-work or errors and one must always seek assistance from real estate professionals. A local real estate agent is your best bet in locating, negotiating ad closing on a new home.

Buying Homes in Port St Lucie

When buying a home in Port St Lucie you must first call a reputable local real estate company to put you in contact with one of their professional Realtors. The locality of your Realtor, who is an expert in real estate in Port St Lucie, will prove to be of a great value in many different ways. The local ordinances, city water hook-up charges and the loans associated with hook ups could become a surprise cost in the future that you have not planned for. Also, planned future expansion of some roads could have an adverse effect in the value of your home in years to come. Many of the above-mentioned points could be exclusive only to the city of Port St Lucie and an out of the area Realtor most probably will not have any idea about these considerations.

The planned extension of Crosstown Parkway and the enactment of Eminent Domain by the city of port St Lucie have affected many homes in the path of this road. The proposed road is planned and the budget is approved to connect the Port St Lucie, especially the St Lucie West and the fast growing Town of Tradition, to US1. Construction of a bridge over the St Lucie River is part of the overall plan to bring the west side of the Port St Lucie closer to the east-side and beach areas. While most out-of-area Realtors might not have any knowledge of the upcoming construction plans for Crosstown Parkway, a local Port St Lucie Realtor on the other hand could warn you of the possible negative impacts that this expansion could have on your future home.

The other matter that could be different from other municipalities is the connection fees that the city has in place for connecting the sewer system of many homes to the city sewer services. While there are still some homes that depend on their septic tank system only, most other homes have been connected to the city sewer. Based on the agreement between the City and the citizens of Port St Lucie the connection fee could be paid in full or through a loan installment. When it comes the time to place an offer to purchase a home in Port St Lucie, your local Realtor should be able to advise you of the existence of such a loan. The common practice in the area is for the seller to pay the installments until the closing day and for the buyer to pay thereafter. But this, like any other point in a real estate purchase contract, could be negotiable during the offer procedure.

Steps to Buying Home in Port St Lucie

There are few steps that you should take before buying home in Port St Lucie or any other neighborhoods in the Sunshine State. These steps are designed to help buyers to be prepared in advance to face any obstacle on their way and to make the purchasing of a home a pleasant ad exciting venture. To begin with the buyers should have their financials and the necessary documentation in a row. This means to calculate the amount of monthly mortgage they could afford along with the necessary funds for down payment and closing costs. The rule of thumb for estimating the monthly mortgage used to be one week salary but in recent years most financial advisors like to see this number to be equal to 1/3 of the total monthly salary.

After coming up with a monthly cost of the mortgage, contact a lending institution and see if, based on your credit, you could qualify for such monthly payment. Your mortgage advisor could easily calculate the maximum price of a house for the amount of monthly mortgage payment that you’re pre-qualified for. This calculation is primarily based on the amount of down payment, the credit worthiness of the borrower as well as the interest rate at the time of the loan. Most often the local banks that you conduct your day-to-day banking are the best source for applying for a loan to purchase a home. At this time after you have an idea of the price range of a home that you would qualify for. The next step is to ask your mortgage advisor for a “Pre-Qualification Letter”. A typical PQ Letter would state that, based on your income/debt and credit score, you have been pre-qualified for obtaining a loan for that amount.

With a pre-qualification letter on hand, it is time to enter the house-hunting phase of the journey in buying a home and contacting a real estate agent. For this, ask friends and neighbors to refer an agent they have worked in the past. If you don’t know anyone in the new neighborhood, you could simply call one of the reputable real estate companies and they will be happy to assign one of their licensed Realtors to assist you in locating your ideal home. When contacting a realtor you should have a list of your wants and needs along with the pre-qualification letter on hand. This list could include the number of bedrooms/baths, garage, pool, school district or the area near expressway or your work. If you are not familiar with the area ask your Realtor to show the area that could match your criteria in the map of the city of Port St Lucie and also show you sample of the available homes in the MLS on the map along with their price range.

Upon locating number of listings that match your wish-list, your real estate agent will set up all necessary appointments and accompany you on a tour to preview the homes. Your Realtor is your ally and the best source that you have in finding the right home, negotiating the right price and following up with all steps in the contract, such as the appraisal and inspection. If all pieces come together you will reach the best part of your journey, which is the closing day and obtaining the keys to your dream home. Again, your Realtor should be able to go through the closing documents line by line and explaining each line-item to you. At any time if you are not clear about a charge or credit ask questions and do not sign any documents until you have clear answers to your questions. Remember, the only bad questions are the ones that you don’t ask. If you are not satisfy with your Realtors explanation of the items in question ask the title company representative who is conducting the closing and they should be able to clarify any area of the closing statement, or HUD-1 as it is known in the industry.

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How To Buy REO Bank Owned Properties In Port St Lucie FL

by | Foreclosure Properties

How To Buy REO Bank Owned Properties In Port St Lucie FL

Buying Foreclosure HomesBuying Foreclosure Properties

The economic meltdown of the last decade has changed the landscape of the real estate and real estate investment foreclosure properties. The appearance of new terminologies such as Bank Owned and REO in our daily vocabulary has also meant the introduction of a new real estate market with rules different from the traditional real estate that we were accustomed to in the past. Although the opportunity to buy a REO property for below the fair market value is a tempting proposition however, in reality, it might not be as simple as it sounds. Many of these properties have been neglected for a long period of time and are in a dire need of repairs. While some repairs could be cosmetic and visible to naked eyes the other hidden repairs might prove more costly that one has estimated. Some foreclosure properties could have been affected by other liens and deficiencies, such as non-payment of utilities or local taxes.

The Difference Between Foreclosure and REO or Real Estate Owned

  1. Buying Foreclosure Properties in Florida

It is imperative that all buyers conduct thorough due diligence prior to taking a step toward buying foreclosure properties in Florida. To start let’s examine the meaning and the process of the foreclosure along with the requirements that buyers have to comply with when acquiring such properties.

Foreclosure Process: After courts grant judgment to financial institutions, primarily for non-payment of the mortgage by the homeowners, the banks start the foreclosure process. The purpose of the foreclosure process is for the banks to recuperate the unpaid balance of the loan, accrued interest, attorney fees and other costs associated with a foreclosure process. The next step for these financial institutions, or the trustees, is to try to sell the foreclosed properties through a foreclosure auction process.

Requirements to Buy a Foreclosure Property: To buy a foreclosure property the buyer needs to have a cashier’s check for not less than the full amount of the minimum bid, all previously mentioned costs. Another important point to consider when purchasing any foreclosure property is for buyers to acknowledge that they will receive the property “AS IS”. In the case of foreclosure properties the term “AS IS” has a very broad implication, which could include buyers’ responsibilities to see that the property is vacated by previous owners, tenants or any other occupants. Buyers also assume responsibility for all liens, unpaid taxes and zoning violations that might have encumbered the title to the property.

  1. Buying REO or Real Estate Owned Properties in Florida

Many foreclosed properties do not receive enough bids sufficient to cover the minimum bid that is set prior to the auction. At this time, all unsuccessful foreclosure properties become the property of the bank and referred to as Real Estate Owned or REO. This means that REO properties are actually the by-products of failed foreclosures and a result of the unsuccessful foreclosure process. The risks that were associated with foreclosure properties are reduced drastically when they become Real Estate Owned or REO Properties. When purchasing REO properties the buyers will receive the properties as vacant and don’t have to worry about evicting the tenants or previous homeowners. Also, all past due taxes along with other encumbrances such as liens and zoning violations will be cleared by the financial institutions that are in possession of the REO properties. This means that unlike the foreclosure properties the buyers of REO properties would receive a title or deed that is free and clear of any and all encumbrances.

The REO properties are normally listed somewhat below the fair market value and do not carry the risks that are associated with most foreclosure properties. While the bank-owned, REO homes are good choices for first-time home buyers, investors and anyone in need of dependable housing, but like any other investment, the homebuyers might do their homework and always employ the assistance of a real estate professional.

REO, Real Estate Owned Properties in Port St Lucie

Buying REO, Real Estate Owned, or as commonly known the Bank Owned Properties in Port St Lucie offers all advantages that we discussed earlier plus a better price point that results in getting more properties for your the money. The 2014 year-end analysis of the real estate market in St Lucie County is clearly the indication of the fact that the better deals are still in this country.  The following data is compiled from the annual report by Florida Realtor Association, FAR:

While the Median Price for St Lucie County for 2014 established at $145.000, the Median Price of $218,000 was recorded for the neighboring Palm Beach County during the same calendar year. Also at the same period, the St Lucie County homeowners enjoyed a higher rate of appreciation on their real estate, by 16.3%, against the 11.8% increase in property values in the Palm Beach County. From major cities in St Lucie County, the City of Port St Lucie showed a 16% appreciation, with Median Price of $145,000 while Jensen Beach showed their Median Prices dropping from $250,000 to $179,000 or a 12.7% decline and Stuart had an increase of 14.7% bringing their Median Prices to $188,000.

Although the opportunity to buy a REO property for below the fair market value is a tempting proposition, in reality, it might not be as simple as it sounds. Many of these properties have been neglected for a long period of time and are in a dire need of repairs. While some repairs could be cosmetic and visible to naked eyes the other hidden repairs might prove more costly that one has estimated. Some foreclosure properties could have been affected by other liens and deficiencies, such as non-payment of utilities or local taxes.

Studying this report proves that while some markets are heading toward becoming out of reach for many middle-class families, Port St Lucie, and St Lucie County homes are still within the reach and are the clear choice for homebuyers and investors alike.

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Foreclosure Forecast for 2015

by | Foreclosure Properties

Foreclosure Forecast for 2015

foreclosure homes portstlucieForeclosure Rate for 2015

The real estate market in this decade has been influenced by distressed properties more than any other factor.  The REO, Bank Owned, and Short Sale have become household terms.  Every year we wonder if there is any end for foreclosure properties and what is the forecast for the upcoming months and years.   With new foreclosure numbers surfacing, the light at the end of the foreclosure tunnel seems to be from a train wreck uprooting families lives.  This is unfortunate that most hiccups in any financial sector seem to  have negative effects on the housing industry.  Today’s culprits affecting our housing market are the economic squeeze in China and the consequent effects on Wall Street and the stock market.  

The numbers give a glimpse to the foreclosure future in the country.  The Distressed Saturation, total REO + Short Sale, divided by all Residential Real Estate Sales, has jumped from 15.4 to 16.1 for the quarter.  The South suffered the most increase in Distressed Saturation by 1.5%, Midwest and West by 0.9% and the Northeast are the only territory with a drop of .3%.

The future of real estate remains uncertain due to many factors that stem from consumers’ confidence and also how the investors will treat the upcoming distressed assets in the real estate and foreclosure market.  While the pessimists reminding us of the doomsday of the last decade, I personally believe with the stock market uncertainty, the real estate investments will become a more in demand investment.  The most notable factor is the negative effects of adding more distressed properties to the current market, which eventually will fall on home builders and developers’ shoulders.  The consumers and investors will welcome the abundance of REO properties while the construction companies’ fear of competing with lower priced resale homes would prevent the jump in construction of such homes.

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Preconstruction Programs

by | Pre Construction

Preconstruction Programs

preconstruction condo salesPreconstruction Sales programs Save & Exit

One of the main reasons for owner occupants to shy away from buying preconstruction properties is the time of  the delivery of their new home.  For a typical homeowner, it becomes very difficult to wait for few years to take possession of their property or qualify for two mortgages.  The other group of the pre-construction investors are renters who are looking to see their home ownership dream come true in the near future.  Since this group is used to living in temporary residences they could easily accept the waiting time required for delivery of their pre-construction homes.  Another point that makes renters good pre-construction buying candidates is the fact that since they do not have to qualify for a mortgage at the time of the contract, this gives them time to clean up their credit history in order to qualify for mortgage and favorable interest rates.

During our extensive work with new-home developers, we have always advised them to create a campaign aimed to reach the renters.  We have also implemented many such campaigns targeting the renters based on their income and the proximity of their residences to the projects and many other factors to narrow down to the best possible prospects.  In some cases, a special program that is tailored to the specific needs of these prospects has also proven successful.  Such programs could include an easier down payment program, perhaps through an installment plan and other financial strategies designed to pave the road for obtaining a mortgage.  The primary purpose of such programs is to demonstrate that to own a home is much easier and at time cost less than renting for this group of people.  We have experienced that most renters could easily afford the monthly mortgage payments, but the qualification for a mortgage, down payment and closing costs, are the main hurdles that are stopping them from reaching their dreams.  By purchasing a pre construction property under special Renters’ Homeownership Programs, they could pay the down payments in installments and also have an ample time to save for closing costs as well as the qualifying for a mortgage.

We invite developers to contact us for consultation on design and implement a Renters’ Incentive Program as well as many other proven solutions for the sales of the preconstruction homes to qualified buyers at the shortest time possible.

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Pre Construction Investment by Foreign Investors

by | Pre Construction

Pre Construction Investment by Foreign Investors

preconstruction condo buildingForeign Home Buyers and Pre Construction Investment

In the past few years, the pre-construction investment by foreign investors was mainly fueled by the rock-bottom prices and a weak dollar that combined have created a feast for the cash buyers.  While a large segment of these investments has been directed toward the bank-owned REO properties but some foreign investors, as absentee owners, are staying away from such properties that are in need of repair and maintenance.  For those investors, the pre-construction opportunities have become the second best option in taking advantage of the currency atmosphere that makes the acquisition of these pre-construction properties a bargain for residents of EU region and other countries with the stronger currency.

The foreign pre-construction buyers are from all over the world, but we could divide them into the buyers from the neighboring countries, European countries, and the rest of the world.  In the neighboring countries, the segment of the population that have the financial means to afford a property in the US are attracted to the pre-construction market for the reasons of safety, security in investment and climate.  The states like Florida, California, and Texas have been a Mecca for most of the foreign home buyers.

When it comes to European pre-construction investors, besides the mentioned reasons there are also social factors that separate them from the rest of the pack.   Even before the formation of the European Union, the people of Europe were accustomed to travel to the neighboring countries for their vacation. While the most European travelers speak more than one language they also feel comfortable traveling or living abroad, which in their case could be the country next door.  This is in contrast to most Americans that prefer to venture around the good old USA and feel out of water in foreign countries especially if the primary language is not English.  Unlike in the US that most people are limited to one or two weeks of vacation, most European enjoy at least a month vacation along with some long holidays and also prefer owning a second home instead of staying in hotels.  While only in recent years, and by the influx of the retiring baby boomers, owning a second home in has become popular with American retirees, the European on the other hands have been more accustomed to that for many years.

In these challenging days for pre-construction sales, the developers need to reach out to the foreign buyers whom thanks to their strong currencies, find the US properties and prices much more attractive than the average American or South American home buyers or investors with weaker currencies.  The Canadians also have been a great target for the developers in the states with a warmer climate specifically the Florida.  Tapping to the foreign investors could become a survival factor for many developers in this volatile market and while most seasoned developers are doing that, the rest could reach out by contacting real estate professionals with experience in international real estate.

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Pre Construction Investments in Condo

by | Pre Construction

Pre Construction Investments in Condo

preconstruction due diligenceBuying Pre-Construction Condos

Does buying a pre-construction condo make sense in today’s market?  This has been the most asked questions in the recent weeks and the answer is not that complicated.  To explore the opportunities in the pre-construction investments of the post-recession era, we briefly examine how the pre-construction properties could create quicker equity and how they enjoy more equity than the resale properties.

Even though the pre-construction properties historically are offered at a price range below the prices of the completed units, but there are some exceptions to the rules.  For example, the condo markets that were not affected by the real estate meltdown of the last few years, like in Toronto Canada, the prices of some resale condos are the same, and sometimes even lower than the prices of the compatible pre-construction condos.  Now, the question is if buying pre-construction condos in such markets are wise and how could a preconstruction investor create equity under most circumstances?

In our view, there is nothing wrong with entering into the pre-construction markets when there are no initial discounts offered by the developers.  As we all know the main objective of investing in pre-construction projects is simply to acquire more equity, quicker.  In a healthy market, this equity is attainable even without any initial pre-construction discounts, although having the discount wouldn’t hurt!  The equity gain is reached in different ways.  First, most developers will eventually adjust their pre-construction prices in order to offset the inflation.  This price increase becomes like a discount for a pre-construction investor who had already locked in the initial prices.

The second way to look at the equity is through computing the total money put into a pre-construction investment against the final profit.  To explain this better consider the following simple example that compares the purchase of a resale condo with the similar pre-construction condo at the same price in the same market after 3 years:

1)      Resale Condo Unit=                                    $1000,000 +

Annual market appreciation 3%                              $90,000     for 3 years

Total Gain                                                             $90,000

2)      Pre-construction Condo                       $1000,000+

Annual developer’s price increase 4%           $120,000+        for 3 years

Annual market appreciation 3%                        $90,000         for 3 years

Total gain                                                             $210,000 

If the initial investment amount for the pre-construction investors is the typical 15% deposit, then by investing $150,000 he has a return of $210,000.  This is a simple illustration to show the possibilities and as most seasoned pre-construction investors will tell you the 12% developer price increase in 3 years is a conservative number and attainable in most markets.  In most cases there are many price hikes during the construction, which starts at a base, or the lowest price for pre-ground breaking, then an increase in time for the ground-breaking and the next increase is when the foundation is completed/  Market permitting this could continue until the completion of the project.

In another word by purchasing a pre-construction condo the investor locks the price and when the project is completed he buys it at the prices of 3 years ago and resells it at the current market value.  In the above example when the investor closes on the property at the $1000,000 locked-in price, the developer is selling the exact condo for $1,210,000.  In the past, we have witnessed many unforeseen factors had forced the developers to resort to substantial price increases in many pre-construction projects that were not in their initial projection.  Perfect examples were the shortage of the cement or dry walls that resulted in an increase in the prices of both items which affected the developers’ costs of the construction that is eventually transferred to the home buyers.  While this was a misfortune for the developers and consumers it became a windfall for the preconstruction investors.

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PreConstruction Investments

by | Pre Construction

PreConstruction Investments

Investing in Pre-constructionInvesting in Pre-construction

In many ways, the pre-construction investments in 2015 possess the same characteristic as before the crash of the real estate market.  Some parameters of how to invest in pre-construction properties might have changed but as far as the investors are concerned the foundation of the investment and the main objective remains the same.  The days of the crazy, overnight price increases in the sale of the pre- construction condos might be over, but the opportunities to enjoy a good return on investment are still out there.  While the seasoned pre-construction buyers need to be more vigilant in choosing the right project, the newcomers on the other hands have to do their homework by either joining a REIT with good track records or acquiring the help of a real estate professional specializing in all aspects of the pre-construction deals.  In order to help both types of investors, we will attempt to share some of our experiences that we have gained with the handling of over half a billion dollars in pre-construction contracts and hope to shed some light on the risks and rewards of the investing in pre-construction projects in 2015.

First, the rules pertaining the purchase of a typical resale property would not necessarily apply to the acquisition of a pre-construction unit.  Unlike a resale condo or home buyer, the main purpose for a preconstruction investor is to gain profit rather than to seek a residence, a homestead and a roof over the head.  When residing in a property is the primary focus, the home buyer would look more to the commute between the residence and his work, the schooling for the children, the space, the number of the rooms and many other factors that will make them choose one home over the others.  On the other hand, the preconstruction home buyer is seeking the highest return on the investment regardless of the location, size, number of the rooms or any other goodies that a typical homeowner might be interested in.

Please follow up with more upcoming articles in explaining the real difference between the resale properties or more specifically resale condominiums and pre-construction properties or pre-construction condos as well as tips on choosing the right preconstruction opportunities and more.

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New Construction Home Market

by | Pre Construction

New Home Builders are Optimistic

TownPark at Tradition New Homes

Coastline Model

As one of the largest employer of the skilled and unskilled workers, the preconstruction home builders have been the backbone of the US economy on a larger scale than perhaps auto manufacturing or any other sectors in the nation.  The economic meltdown had the most adverse effect in the industry that went from having lines of the buyers for the pre construction units outside their office to the fire sale of their inventory along with discounts and incentives that ate the bottom lines and forced some to the bankruptcy.

The new survey conducted by Ernst & Young, LLP meanwhile  indicates the growing optimism among the home builder with a whopping 95% projecting the end of the downturn and the beginning of the profitability in 2013.  According to the same report the new home builders’ concern of the past two years about the interest rate and the ability of the home buyers in obtaining loan have been diminished but they believe that they will reach the benchmark of one million home sold in 2015 or 2016 instead of once considered 2014 or 2015.

This is in line with our prediction for 2012 being a start point for new home construction and improving from there on.  The only reason that 2012 could not witness better days for new home construction was the lingering foreclosure filings by the banks that came to a halt after the Robo-Signing scandals force the financial institutions to stop all filling.  Absorption of the deeply discounted bank owned homes or REOs will be the deciding factor on when and how the construction of new homes would see a real start.  Construction of new homes would not make any economic sense, as long as there are homes at below the market prices out there.

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Pre Construction Opportunities

by | Pre Construction

Pre Construction Opportunities

Reducing HOA FeesPre-construction Opportunities for 2015

The pre-construction real estate opportunities are growing in Port St Lucie, but look for many new construction projects to start by the next year along with great incentives for the buyers of the preconstruction units.  As we reported in previous articles the construction business should get a fresh start in 2014 and improve from there on.  While the foreclosure fiasco has dumped many homes in the market that are below the market value but there are still those home buyers that prefer a new home with builders warranty over the foreclosed homes that need work.  One main contributing factor is the higher initial cost of today’s loans with larger down payment requirements that most consumers don’t have cash leaving little to spend on any home improvement or repairs.

As one of the hardest hit sectors during the housing industry collapse of the last decade, the construction industry and specifically the construction of single-family home were poised to make a comeback in 2014 in Port St Lucie and enjoy a steady growth in the years to come.  While some of the prominent home builders have weathered the storm by converting the unsold units to rental opportunities, most have cut their expenses to the bare minimum which resulted in fueling the unemployment rate in the nation.  These companies have barely made it and if lucky they might have broken even in 2011 and still trying to survive far into 2013.  ALL the gloomy days, however, are coming to end and there is a new optimism in the air that although carries a cloud of cautiousness, but just the talk of the profitable 2013 is a feel good story that we have long waited for.

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How to Buy Pre Contsruction Homes

by | Pre Construction

How to Buy Pre Contsruction Homes

Veranda Gardens Model Homes

Veranda Gardens Model Homes

Buying Pre-Construction Home 

While many home buyers debate on buying pre-construction or settle for the purchase of existing homes, they should first weigh the pros and cons of both types of properties.  Buying new homes in a today’s market has many advantages for today’s home buyers that also would help the ailing construction industry.  As the novelty of buying a foreclosed home gradually fades away, the home buyers will turn to buying the hassle-free new homes, some with many free upgrades, free HOA and at a discounted price.

In the past, the home buyers and investors concentrated in the acquisition of the pre-construction units in order to receive any discounts.  In the current market, however, there are more opportunities for the  purchasing move-in-ready new homes but without the waiting period for the completion of the units purchased during the preconstruction.  This is a sign that the smart consumers have turned from the instant gratification of the discounts offered by foreclosed homes in favor of more stable new construction homes.   Most new construction homes are offered in great price structures while promising a solid equity just a few years down the road.  If home buyers not in a rush they could add even more discounts and free upgrades to the already low prices of new homes by finding pre-construction opportunities.  There is a peace of mind that today’s pre-construction homes offer through a built in equity along with a builder’s warranty, more energy efficient homes, and appliances.  These advantages should be enough incentive for many home buyers to reignite the slumping new home construction.

There are other perks and advantages to purchasing a new home that could outscore the discounts offered by the banks for dumping their foreclosed properties.  Choosing a home that you like versus a home that is cheap but doesn’t match your requirements could be enough reason to consider purchasing new homes.   This option allows home buyers to choose the floor plan, the neighborhood even the safety that otherwise could be sacrificed in the name of saving a buck or two.  Today’s new home construction employs the latest technologies and construction materials in building a safer home with efficiency in mind that were not available in the past.

The new codes for homes in hurricane-prone Florida have been in enforcement for many years but would not be imposed on homes that were constructed prior to these codes.  There are literally thousands of these homes in the foreclosure home market.  On order to perform a minor repair or alteration to the exterior of these homes, one has to go through extra expenses to comply with the required Miami-Dade County Building Codes.  In some cases, the compliance and permitting could result in substantial costs and exceed the original cost of the repair.

The more serious downfall of acquiring older foreclosed homes could be the safety issue during a powerful hurricane.  This is while the new homes in the State of Florida and the coastal region are constructed to withstand the force of winds in 110 and more miles per hour and some new impact windows could be resistant to missiles from the debris of up to 160 miles per hour.  When it comes to a category 2 and up hurricane these perks become much more valuable than the money saved buying a home that was built prior to Hurricane Andrew, which was the start of the implementation of now famous Miami-Dade County Construction Codes.

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Pre Construction Due Diligence

by | Pre Construction

Pre Construction Due Diligence

preconstruction due diligencePre-Construction Due Diligence Save & Exit

In today’s market, the importance of the pre-construction due diligence in choosing a right project is more important than ever.  The chronic weak dollar, risky stock market, zero prime and low return on investments are the defining elements of the post real estate market crash.  As we go through the recovery period we are slowly entering the new era of construction with developers facing tight lending practices and the dilemma of how to sell pre-construction units to qualify for construction loans.

While the pre-construction home buyers and investors are being ever so cautious a new wave of potential pre-construction buyers is emerging in baby boomers as the single most influential group affecting the future of the construction boom. They are bound to influence the real estate market both as the end-users or the investors. The end-users could be either a first or second home purchasers while the investors are trying to complement their retirement fund by purchasing and selling the pre-construction real estate or known as flipping.

No matter what category you belong to, just remember that even during the real estate boom a staggering 40% of preconstruction projects went bust and a number of investors lost their deposits. However the golden rule of thumbs that applied to the investors of the past still applies to today’s home buyers or investors. That golden rule of getting into pre-construction scheme still remains the same, which is nothing but a comprehensive Due Diligence Process. A good due diligence process will replace taking chances and entering the pre-construction market with a strategy to lessen the risk of any loss.  That said, the question remains in how a typical pre-construction investor could conduct a due-diligence process to reduce the risk of the loss of his investment.

Historically a real estate investor either did not do any due diligence or joined a real estate group, such as a REIT, that afforded them a more professional approach to mitigating the risks in choosing a project.  Working with an investment group has many other merits.  Most developers tend to grant more favorable terms to a bulk buying group and the bargaining table is normally tilted more toward the investment groups than an individual buying a single unit. However in this re-emerging pre-constructions market there are not that many real estate investment groups as before and if found, they might be engaged in projects that are not a good fit for certain investors.

To fill this void for individual preconstruction purchasers we have compiled a list of the to-do items that based on our experience in both working with developers and preconstruction buyers are essential tools that will separate a seasoned pre-construction buyer from rest of the pack:

1)      The Principals- The first step is to identify the main players in the project i.e.: a) Developer b) Architectural Firm c) Lending Institute d) Escrow Agent e) Marketing Group

2) Land Ownership– does the developer own the land outright or do they have the option to buy, red flag the projects that the developers don’t own the land.

3) Financial Overview- the following items are normally a tell, tell sign of what is in the future of the project:

a)     How much equity does developer already have in the project

b)     How much fund is dedicated to the future of the project

c)      Has lending institution granted a loan commitment yet

d)     What is the latest appraised value of the land

e)      What terms are in place by the lender in order to secure a loan

Just remember the more skin the developer has in the project the more chance of success the project has.

4) History of the Past Projects– The list of developer’s attempted and completed projects is a good indication of their strength and discipline.

5) The specifics of the project– write down all details of the project like:

a)     Price point

b)     Amenities

c)      number of units

d)     Targeted market

Are few of important points.

6) Location, Location, Location– this rule would never fail you. If the location does not match the targeted market no matter how beautiful of a project a failure is just around the corner.  If the final price of each unit is too expensive for the location, for example, finding home buyers willing to pay that will prove difficult if not impossible. Some other factors that could also influence the location of a project are: demographics, other planned projects in the area, population expansion along with job increase

7) Zoning, Permits, and Environmental Issues– If the zoning is approved for the project and what is the status of permits or if the project is in violation of EPA

8) Development Overview– Developers usually compile a comprehensive overview of their project that is not offered to pre-construction buyers like you without asking. Ask for it!

9) Due Diligence Package- one of the first phases in starting a project includes feasibility studies and economic studies that are used as a guide for the developers as well as presenting them to the financial institutions to convince them of the viability of the project.  Developers have these studies in their possession, Ask for it

10) The Cardinal Sin– do not go directly to the developer without a broker.  Service of a real estate professional does not cost you, use it. Locate an agent that is experienced and specialized in the sale of pre-construction properties.

11) Final steps– study all the information that you have gathered to reach your own educated conclusion.

Excellence in service and loyalty to our partners with ethical guidelines will help the pre-construction real estate investors and developers alike. The good developers always appreciate the educated consumers. Whether you are buying your first home, a vacation home or trying to take advantage of preconstruction discount opportunities as real estate investment, please contact us. During the past market, we successfully fulfilled near $500,000 in pre-construction contracts and preserved the deposits of our buyers, how many other brokers could claim that?

If you are a developer with a solid project, use our experience and let us present your project to our partners and expedite the pre-sale of required units and construction loan process.

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