Pre-construction Purchase or Buy already Built?
Published: 02/12/2010 by Judi Shaw Living Riviera Maya Real Estate
everyone.
Does time seem to moving faster than ever? Have you realized how precious time is because another week as whizzed by, leaving you wondering what happened? There never seems to be enough time to go around. In the truest sense of the word, time is truly a ‘luxury’ and we must spend it wisely.
That is one of the reasons we are seeing such an increase in interest in second homes here in Playa del Carmen, Riviera Maya. There is a growing recognition that a second (or third or fourth vacation home) forces us to slow down even if it is just for a little. A home in a beautiful destination allows us take time from our busy lives to put where it is important and focus on health and our family and friends. This remains true in good times and in slow times.
If you, like many others, are considering the Riviera Maya as a place to invest and vacation or to relocate or retire, the choices can be staggering.
Indeed Riviera Maya is vast region on the Mexican Caribbean that stretches south from Cancun, Puerto Morelos, to Playa del Carmen and Tulum, toward Belize. There are over 75 miles of spectacular beaches and miles of jungle and it is home to the worlds second largest reef called the Meso America reef.
Real Estate offerings in the region of Riviera Maya are equally vast. The key a successful and happy lifestyle investment is to define what type of real estate best suits your personality and price tier, and desired location. Are you an off –grid eco jungle lot type of person? Do you prefer luxury master planned gated golf/beach communities with brand name spas, restaurants and shops, kid leather glove service and amenities? Are you a build- it- yourself kind of person, seeking the ultimate pristine, remote beach-front estate for a dream home? Or do you look forward to some space near the beach, in a community of single homes? Many prefer the ultra convenient, “use and lock and go” condominium, in downtown beach area.
These questions are part of any good needs analysis conversation with your realtor, which forms the foundation of your buying process.
Following the discovery for which property type and location suits you, there is another important consideration. Many people want to understand the difference between investing in a preconstruction purchase of a land development, or a home, or a condominium, versus buying a property that which is already built. While this decision is very personal based on goals, price tier and personality, there are a few considerations to help you make the right decision for you.
In the case of preconstruction, the idea of getting in early on any development appeals to the investment minded people, who are focused on capital appreciation. Typically preconstruction works well for visionaries, the folks who can see a project come alive from the floor plans and conceptual renderings, while there is still dirt on the ground.
The idea of preconstruction is that it offers maximum capital gain to the buyer at the early stages. Prices are usually lowest in the beginning of the sales phase and at the beginning of construction, and they increase over time as construction and sales progress. Prices reach their peak at completion. During construction the corresponding housing market values (hopefully) increase also, thus giving the initial buyer an automatic capital appreciation.
In preconstruction offerings, there is usually only 20 or 30 percent payable upon the signing of the contract, with the balance due at completion of construction and “physical possession “ of property. Thus any capital appreciation is gained with only 20 or 30 percent on the dollar.
There can also be some extra benefits purchasing preconstruction that can increase the return on investment for an early bird buyer. It is not uncommon to see 5% - 10% discount on published prices for the first 15 buyers or prepaid trips to view the property when it is being built. If the property has a brand name hotel rental option, being an early investor can mean you receive an higher percent of rental income than the later buyers . Currently one local developer of golf a course community on the Riviera Maya is offering a unique founders package. When buying a large lot with custom built home, founders receive 3 additional smaller golf lots. This obviously gives a great return on investment when the additional 3 lots are resold.!!!
Preconstruction is also appealing for those who want the first pick of the property and just want what they want.
Remember though preconstruction purchases have some other considerations.
The time frame from when you sign the contract of purchase and sale and make the initial 30 percent down payment can span 2 years and more. There can be unexpected delays and changes that require the ability to weather these uncertainties. As long as you look at the property acquisition from a long term perspective you will keep a good investment. If you look at the purchase as a quick flip you might be disappointed.
It must also be said that the initial 30 % down payment flows through to the developer, it is not held in escrow. Therefore it is of utmost importance to consider the financial stability of the developer, the under lying title and permits involved, and the protections provided in your purchase contract. All these should be reviewed by a lawyer locally, here in the Riviera Maya, for your benefit, before signing and making the initial deposit.
One last piece of information to consider on preconstruction property purchases is the delivery of title of ownership. Even though you have taken physical possession of your condominium or home or land when it is complete, and you have paid for it and can begin using it, the title of ownership may take 6 months or a year or longer to be delivered to you.
Do your due diligence and do it well. In doing so you can make a safe and well planned preconstruction investment in your vacation home and receive healthy returns.
For many people, the idea of purchasing something that is already built is superior.
In these economically uncertain times, the idea of buying what is visible and built has its benefits. Simply stated, the resale of any property, means you can begin immediately enjoying the use of it or it can be rented right away (if that is part of the plan). Also the title of ownership is immediately transferred in your name. In the case of a resale, what you see is what you get and uncertainties are removed.
Everyone has a different perspective and different goals, different visions.
Here in the Riveria Maya we have something for everyone including jungle eco lots, large beach front pieces, luxury condominiums, luxury estates and homes.
Will you take the luxury of time to come and see us here?
