Gulf Coast Pre Construction Condominiums
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The Alabama/Florida Gulf Coast has seen tremendous growth along its beaches in recent years. Pre-construction investing is the opportunity to join a fellow group of investors to help a developer procure a loan for the construction cost. In exchange, prices are locked-in for the duration of construction and value can increase significantly, especially as the condo takes shape. In many cases, the developer allows contract assignments in which case, the buyer can effectively sell the condo - all during the construction phase. In this scenario, a new buyer accepts the contract assignment and closes at project completion. Any profit realized during assignment is paid to the previous contract holder at closing/project completion. It is important to understand that money does not change hands until the building is completed and the "certificate of occupancy" is awarded to the developer. After this certificate is is obtained, the buyers / owners in the building will start to close loans with the bank and all proceeds come during this process. Also, not all developers allow contract assignments, so it is important to verify this.
Current Alabama Gulf Coast Pre-construction
Perdido Dunes Tower is the latest Orange Beach pre-construction condo and a low-density complex near Perdido Pass. The project will feature 20 direct gulf-front units at 1,900 sq. ft. and have a community area on top of the condominium along with a sauna and exercise room; the pool is part of the common area with Perdido Dunes - an existing condominium. The condos will be a short walk from the jetties at the pass offering wonderful views of the boats coming through.
Phoenix Orange Beach II is the newest Phoenix development located just 1 mile west of Perdido Pass Bridge and centrally located in Orange Beach close to shopping, dining, and entertainment. The 26-story complex will offer a great amenity package including a beachfront pool & lazy river, indoor heated pool, hot tubs, fitness center, conference room, and climate controlled storage units. Units are available in three- or four-bedroom floor layouts featuring floor-to-ceiling windows overlooking the Gulf of Mexico and of Perdido Pass.
Phoenix Orange Beach, like Phoenix Gulf Shores, will all be three- and four bedrooms. Phoenix Orange Beach will be a 21-floor building with two floors of community areas and nineteen floors of living space. Situated on a 2.75-acre lot on Perdido Beach Boulevard, residents of the 114 units at Phoenix Orange Beach enjoy 250 feet of pristine white-sand beach just outside their door. In addition to the beach, there will a spacious outdoor pool and lazy river and a heated indoor pool. An 8-story parking garage is available onsite. This latest Phoenix project is slated to be finished by October 2018, so now is the time to grab one of these luxurious condos.
Abaco is a state-of-the-art, $15 million project in the heart of Gulf Shores. With 78 Gulf-front units, residents will enjoy breathtaking views of the Gulf of Mexico from inside their condos and out on their private balconies. A zero-entry outdoor pool, indoor pool. lazy river, multi-level parking garage, fitness center, and theater room are just a few of the many property amenities residents and their guests will enjoy at Abaco. The kitchens in these condos have beautiful quartz counter tops, stainless steel appliances, and a pantry. Aside from spectacular views of the Gulf, these balconies come with an electric grill for cooking up some burgers and hot dogs during the summer without having to run all the way to the outdoor common area. Abaco is centrally located in Gulf Shores.
Current Perdido Key Pre-construction
Coquina Caye, currently under pre-construction, is set to be a low-density upscale condominium with fourteen condo units plus a penthouse suite on the top floor. The condo units at Coquina Caye will offer four- or five-bedroom floor plans with private balconies looking over the Gulf. The penthouse on the top floor has 4,325 square feet of living space in addition to a 920-square foot private balcony. The other units range in size from 2,442 square feet to 3,313 square feet with 370-square foot balconies. There will be high-end appliance packages in the kitchens, with granite counter tops in the kitchen and bathroom. Hardwood flooring in the dining and living room along with crown molding are available in all units. Coquina Caye amenities will include indoor and outdoor pools and hot tubs, assigned covered parking, a fitness center, and direct access to the beach.
Current Destin & Fort Walton Beach Pre-construction
865 Scallop Court | Fort Walton Beach, FL 32548
Luxury condominium Blu is Okaloosa Island's newest condo development in almost 10 years. Currently under construction, Blu is a highly sought-after beachfront destination with half of its units already sold. These four and three bedroom residences will feature upscale appointments such as quartz countertops, designer cabinetry, gas range, stainless steel appliances, and porcelain tile floors. Blu amenities will include resort-style pools, jetted spa, gulf side fire pit, grilling area, and a modern fitness center. List prices for units range from 750K to 900K.
The Henderson Lofts
2705 Scenic Hwy 98 | Destin, FL 32541
Construction is currently underway for The Henderson Lofts and is scheduled for completion during the late fall of 2017. The Henderson Lofts is a 54 unit luxury residential condominium located inside the widely popular Henderson Beach Resort in Destin, Florida. All residents and guests will have access to the amenities offered by the Resort including several pools, a lazy river, on-site restaurants, a luxurious spa and exercise facility. Prices of units will begin at $300,000 and buyers can select from one or two bedroom floor plans.
134 Norwood Dr | Miramar Beach, FL 32550
Villa Burago will offer luxurious gulf front residences with Italian-influenced architecture and design. Nestled on 75 feet of private beach along the Emerald Coast, these upscale condos will feature spacious open plans ranging from 3,000 to 3,500+ square feet, travertine flooring, custom cabinets, high-end appliances, gas fireplaces, and frameless glass showers. Villa Burago is minutes from the heart of Destin, renowned golf courses, premium shopping outlets, and popular restaurants.
Current South Walton & Scenic 30A Pre-construction
Costa Blanca 30A
4461 West Highway 30A | Santa Rosa Beach, Florida 32459
Costa Blanca will feature 14 gulf-facing residences set on 200 feet of private beachfront. These condos will offer a contemporary coastal design with upscale furnishings such as Wolf & Sub-Zero appliances, exposed wooden beams, quartz countertops, panoramic floor-to-ceiling windows, and oversized terraces. Costa Blanca will be comprised of three to five bedroom spacious floor plans with some units featuring media rooms. Amenities will include a resort-style pool & deck, fitness facility, private owner storage, and underground parking. Currently, 3 units remain for sale with backup reservations being accepted.
2743 Scenic Hwy 30A | Santa Rosa Beach, FL 32459
The exclusive residences of Viridian are located above Surf Deer Restaurant in the quaint community of Seagrove beach. These luxury condominiums will feature 3BR/3.5BA floor plans on the second, third, & fourth levels of the development. Ranging from 2,678 to 3,845 square feet, units are open concept with grand balconies offering spectacular views of the Gulf of Mexico and private beach access. The Viridian is walking distance to the popular downtown district of Seaside and a short drive to Destin attractions.
28 Main Street | Rosemary Beach, FL 32461
The Orleans will feature 7 elegantly designed residences in the heart of Rosemary Beach just off Scenic Hwy 30A. The development will be comprised of mixed residential and commercial properties; the ground floor will feature retail stores and restaurants and upper floors will house condominiums. Interior furnishings will be hand-selected by award-winning designer, Tony Cappoli, blending a traditional coastal style with a modern touch and bold statements. Almost completely sold out, only 2 units remain available for The Orleans.
60 S Barrett Square | Rosemary Beach, FL 32461
The Georgetown is the final development nestled in one of Rosemary Beach's premier locations, North Barrett Square. These contemporary and classic condominiums will feature 3 bedroom & 3 bathroom spacious floor plans and well-appointed with high-end furnishings such as Wolf, Sub-Zero, & Asko appliances, marble countertops, travertine stone baths, and polished nickel plumbing fixtures. Residences will offer multiple balconies with street views of the downtown area and a covered deeded parking space - a rarity for the area. The Georgetown is currently under construction and taking reservations for the handful of units still available.
Current Panama City Pre-construction
Calypso Tower III
Front Beach Rd | Panama City Beach, FL 32413
One of Panama City Beach's popular condo developments is expanding to include a new 250-unit tower. Calypso Resort is currently developing Tower III, a 22-story high-rise offering well-appointed condos and an excellent amenity package rivaling the resort's other two towers. The complex is set in a highly desirable stretch of Panama City Beach and walking distance to restaurants, amusement parks, and well-known entertainment and shopping district, Pier Park. Panama City has not seen any major condominium developments since 2008, Calypso Tower 3 is a highly-anticipated project for the area and has a target completion date for Spring 2019.
The Alabama and Florida Gulf Coast Pre-construction Market has been fairly stagnant after the recent problems with the economy. Now that the climate seems to be, once again, on an upward swing, talk of per-construction is circulating. Circa 2005, the average price-per-square-foot was in the neighborhood of $500 - $600. At those prices, it was beginning to get hard to find any room for profit and sales declined or stopped actually. The current square footage price for an average, newer gulf front condo is approximately $370 / ft.
Here are a couple of the current projects and their cost per square foot:
Phoenix Gulf Shores - $450 square foot
Phoenix Orange Beach - $445 square foot
Newer existing Condos
Lighthouse - $370 square foot
Seawind - 360 square foot
(These numbers are approximate and were calculate on 8/11/2017)
As the numbers indicate, the prices for pre-construction differ from existing condos and these simple numbers can be used to gauge the opportunity with buying pre-construction vs existing condos. The rental revenue is another important factor, so we're published revenue information for each condo in Gulf Shores and other markets too.
The great thing about existing Gulf Shores condos for sale is that there's no wait and it's available immediately. When considering pre-construction, the wait for the condo to be completed can be difficult as the anticipation builds. But, during normal conditions, the pre-construction condo will be appreciating, which is profit. In some cases, if structured properly, the buyer can assign contracts and make a profit without ever closing / buying the condo.
There's currently more Orange Beach condos for sale in the pre-construction phase and more room, so Orange Beach will be a good spot to look for opportunities.
Perdido Key condos for sale in the pre-construction phase will typically be larger units and rent-restricted condos is much more common here.
Revenue is an important factor for most owners. We've published revenue info for every condo on the Alabama Gulf Coast and many in Florida. Please let us know if you have questions or would like to discuss this or other info.
- What is Pre-construction? Pre-construction is the opportunity to join a fellow group of investors in an effort to finance the development of real estate. Basically, it's buying a condominium before it's built.
- What are the benefits of buying Pre-construction? The buyer benefits in several ways. First, the lack of mortgage payments while the building is under construction will constitute a profit. The developer offers incentives because sky and paper are harder to sell than concrete and steel. Second, the appreciation that takes place while the building is under construction constitutes profit ( a condominium assembled is worth more than condominium not yet assembled). The property appreciation that takes place while under construction is also significant during an average economy. Finally, the tax benefits and lack of out of pocket expense due to the financing methods available make this the best investment real estate has to offer.
- How do I reserve a condominium? A simple reservation agreement can usually be signed with a letter of credit typically ranging between 20% - 30% .
- What is the letter of credit? A letter from the bank stating the recipient is capable of buying said condominium. The L.O.C. can be the collateral using most anything of value.
- What does the letter of credit cost? A lending institution will generally charge 1% annually for the amount of the letter.
- Must I use a letter of credit for reservation? No, cash payment may be substituted for the letter of credit.
- Do I earn in tersest on my cash deposit? Yes, the funds are invested in a pass book account. Any interest paid on the account is applied to the purchase.
- Who holds the deposit money? An escrow agent of the developer holds the money. (Usually a title company)
- What format of the letter of credit is used? The developer generally provides a format for the letter that must be used.
- What is hard contract? When enough units are sold and the developer is applying for a construction loan, you will be asked to go to hard contract. A hard contract is the binding agreement that converts the reservation to a sale. When the contract is signed, generally you have 7 days to review the offering and make your decision in proceeding with the purchase. (Note) There will come a time, during the offering, that you will go directly to hard contract. This usually happens after some short time during the selling process.
- When does the construction start? Construction will commence once the developer has sold a number of units (usually 80-90%) and will fund the construction loan.
- What does need not be built mean? This means the developer is allowed to pre sell the condominium, which has not been constructed. It also means that it may not be built if all permits and approvals are not met. In this unlikely event, the purchaser is protected under law.
- What happens if the building is not built, at no fault of the purchaser? Your deposit will be refunded with interest or your letter of credit will expire and not be called.
- How long is the construction period? Generally, it takes 1.5 to 2 years to complete.
- How much profit should I expect? It depends on the general market conditions, interest rates, and competition. In the past few years, profits have ranged from $10,000 to $50,000 on average, peaking at over $100,000.
- Can I sell before closing? Yes, in which case, the developer allows a new purchaser to take over your contract. The new purchaser must come under the same pre-construction purchase and escrow agreement as the first buyer.
- What happens if I sell my unit prior to closing? The developer will collect a deposit from a new purchaser to assume the existing contract. The new buyer then steps into place to close and your deposit will be returned with interest.
- Do I have to close on the unit if I have not sold it prior to closing? Yes, if you choose not to sell your unit, you are expected to close.
- Can I reinvest my 1031 into Pre-construction? No, because of the length of construction for a condominium, the guidelines for the exchange are not met.
- Are there any costs related to the sale? Yes, you will be responsible for some closing expenses such as title insurance, funding of the association, insurance, reserves, etc. These charges will be outlined in a Good Faith Estimate provided by the selling agency, and in the developers offering statement.
- Are there any other contingencies, such as financing? No, the sale is not subject to financing.
Information is deemed reliable but not guaranteed. Pre construction is "Need not be built".