Real estate investments have historically been a more stable vehicle than many other asset classes. As a result of the most recent stock market crash, many investors have turned to preconstruction contracts as a form of real estate investment and have generated significant returns as a result of an unprecedented market value increase.
The market however, has temporarily has made a turn from a red-hot seller’s market to a buyer’s market. Due to the sudden increase in supply, many of these investors may not realize the short-term gains they were anticipating. Unfortunately for many, real estate does not avoid the supply and demand laws of economics.
The current market conditions may negatively affect thousands currently invested in real estate – specifically preconstruction contracts.
Overview of the Mechanics of Preconstruction
For those who may not be versed in preconstruction, the following will provide a brief overview on preconstruction contracts: In order for a developer to build a condominium/town home project, a developer typically must sell 50-70% of a project in the form of preconstruction contracts. A “Preconstruction Contract” is an obligation to purchase a specific unit when a project is completed. A 10-30% deposit is traditionally required to reserve the unit. The reason developers sell preconstruction contracts is because once they have sold 50-70% of a given project, a developer can secure a construction loan from a large lending institution to complete the project.
What are some of the risks associated with preconstruction contracts?
What if the builder/developer cannot sell the units at the current price and is obligated to lower the unit price after one has already locked in to a contract at a higher price? What if the builder/developer gets into financial trouble? What if the project fails? Is one’s deposit secure? What will happen to the project going forward?
Is there a means by which one can benefit from the softening of the real estate market? Tens of thousands of development projects are still projected to break ground within the next few years and developers have so much to lose. Is there a means by which one can capitalize on the developers’ need for pre-sales and yet reduce the risks associated with market fluctuation?
Being a real estate advisor and having my entire nest-egg and income directly tied to real estate, I found it imperative to seek the answers to these questions. After much research, I encountered a company by the name of BridgePoint Ventures, LLC. I was amazed with the finding. BridgePoint Ventures represents some of the nations’ most successful CEOs and families and is one of the few companies that has developed a platform to address the questions above.
How does BridgePoint capitalize on the market softening?
BridgePoint provides the most successful developers with what they need in this time of uncertainty – presales. After much due diligence, BridgePoint provides developers with an opportunity to sell up to 33% of a project’s units within a 21-40 day period.
In exchange, BridgePoint has engineered a means by which a unit purchaser can potentially generate double-digit profits without ever having their capital accessed by the developer – the entire time the deposit sitting in escrow.
BridgePoint is extremely selective about whom they allow as joint venture partners. This is not a stock or a security nor an offering to invest. It is an invitation to listen to a creative real estate opportunity and gather enough information to potentially be considered as a joint venture partner with one of the most successful and innovative real estate firms in the country.
For more information, please contact:
John Kavazanjian
Exit Realty Welcome Home
info@palmbeachrealestatesource.com
561 381 3948 Office
561 699 3004 Mobile
