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06-21-2007, 10:59 AM #1
Renter
- Join Date
- Apr 2007
- Posts
- 8
Preconstruction?
Does anybody do preconstruction?
How many projects have you done?
What is the investment?
I would like to hear feedback on all different levels and see what everybody is doing.
To everyones success!
James
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06-25-2007, 02:02 PM #2
Condominium
- Join Date
- Jan 2007
- Location
- Palm Beach Florida
- Posts
- 225
James,
I do a lot of pre-construction and actually focus most of my time working with developers.
If you want to invest, I would not go it alone. You are better off working with a Syndicated Buying group that has done all the work and found the projects that need pre-sales to get their construction financing.
I can direct you to a couple of good companies. They share in the revenue created from the transaction, but these are deals you could never negotiate on your own.
Example:
$400,000 Day 1 price
Your price $340,000
Developer has to increase the price at least 6% from day1.
$424,000
Spread=$84,000
You put up a 10% deposit that the developer cannot touch, stays in escrow and gets a little interest.
The developer is required to re-sell the unit for you prior to CO.
Here is where the funds are split. When the developer re-sells the unit, you get back yout 10% deposit, and the contract hangs until closing. At closing you get either 50/50 or 60/40 of the net funds from the spread.
In this case your deposit would have been $34,000
Your return would be 50/50: $29,280 on top of your $34,000 investment.
Not to shabby.
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