A Must-Read before Buying a Miami New Construction Condo
Exposing the Realities of Miami’s Pre-Construction Condo Market
When new Miami condos hit the market, terms like “luxurious” and “the best” are often thrown around so loosely that it can leave buyers unsure about what truly stands out. The reality is, there are some concerning practices in the Miami pre-construction market. Realtors, who are supposed to prioritize their buyer’s best interests, may either miss the warning signs or lack the experience to recognize them.
With our extensive experience selling hundreds of new construction condos in Miami, we don’t shy away from being honest about what we like and what we don’t. Even in developments we support, not all floor plans are created equal—some work beautifully, while others simply don’t. The conversation is specific because, in the end, you’re purchasing a particular unit, not just a concept.
Thanks to our super-broker status with many developments, we receive early access to the latest information and inventory. While we enjoy the perks of this status, we remain committed to giving you independent advice.
There are some hard truths about the real estate business that rarely get discussed, but we want you to know that we’re here to protect you. Below, we’ll explore the less talked about, more concerning aspects of the market.
THE FULL LIST OF NEW CONSTRUCTION CONDOS IN MIAMI
Construction Loans
Construction loans play a crucial role in determining whether a project will move forward. While some developers don’t require financing, others need to have 50% of their units sold before securing a construction loan.
A construction loan is often presented as a selling point, signaling that funds are in place to begin building. However, recently, one developer claimed to have secured a construction loan, when in fact they had merely refinanced an acquisition loan. Refinancing a property you already own is vastly different from obtaining a construction loan needed to break ground. Once a developer secures a true construction loan, it’s a good indication that they’re ready to begin building. If they’re still working on obtaining this loan, the timeline for breaking ground remains uncertain.
Be cautious of developers who are overly confident or heavily leveraged. Look for those with a proven history of not only delivering high-quality projects but also delivering them on time.
In Florida, one of the few states where developers can use clients’ deposits for construction, this risk is heightened. Arbor in the Grove serves as a cautionary tale, where poor budget management left the developer without enough funds to finish the project. In the worst-case scenario, if a developer defaults, they could take your deposit with them. While buying a pre-construction condo in Miami offers great profit potential, it’s crucial to choose wisely.
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Groundbreaking
Developers typically ask for 10% to 20% of the contract price at signing, followed by another payment at groundbreaking. However, some developers prematurely announce groundbreaking events just to request additional funds from buyers. These events may be more symbolic than actual, involving little more than a ceremonial shovel.
With current high interest rates, many developers are delaying their applications for construction loans, hoping rates will drop. This causes further delays in both groundbreaking and overall project timelines. Be sure to verify whether a true groundbreaking has occurred before making additional payments.
Vita Grove Isle is a condo by Ugo Colombo. A developer with a proven track record that is respecting its proposed timelines
Miami Pre-Construction Condo Market: Rental Buildings
I’m not a fan of short-term leases or buildings that permit Airbnb rentals. These types of condos tend to attract investor buyers, who are often speculators. When the condo doesn’t perform well or the economy slows, investors are usually the first to sell. A large number of units hitting the market at once causes prices to drop. We’ve observed this pattern repeatedly, and these properties consistently underperform. The same applies to hotel-condo investments, which are essentially hotel rooms and rarely see significant appreciation in value.
Currently, many new pre-construction condos are being built with short-term lease and Airbnb allowances, particularly in the Downtown and Midtown areas. If you’re aware of the risks and are willing to take on the volatility, this might be a viable option. However, if you’re looking for properties that are more likely to appreciate, feel free to check out this article or contact me directly.
The Residences at Mandarin Oriental Brickell Miami are created with end-users in mind. These are the kind of buildings that focus on high-end finished and functionality
Floor Plans
Accurate floor plans are crucial. There’s often a discrepancy between the architectural floor plans and those marketed by developers. Developer floor plans tend to be 10-15% larger than the architectural ones, which are the official plans filed with the city. When comparing an existing condo with a pre-construction unit, be sure to compare the architectural square footage, as existing condos use these while developers may inflate the size to make the price per square foot appear lower.
Understanding the floor plan itself is equally important. Even in high-quality buildings, some units have poorly designed layouts. Consider factors like natural light, unobstructed views, and overall flow. With my years of experience selling luxury condos, I’ve learned what works and what doesn’t. A floor plan on paper can feel completely different when you’re walking through the actual space. Many buyers imagine a layout during the purchase process, only to discover later that it doesn’t suit their lifestyle as expected.
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Developers: What to Know?
Can They Deliver on Time?
Pre-construction contracts in Miami often allow for delays of up to two years or more. It’s crucial to research a developer’s track record, not just for quality, but for meeting timelines. Many buildings expected to be completed in 3 years have taken 5 or 6 due to inexperienced developers. Always verify their history before committing.
Do They Deliver What They Promise?
Some developers, like Ugo Colombo, are known for keeping their promises. Others, with a less reliable history, may return with “improved” projects but fail to deliver, leading to lower resale values. Be cautious of these developers and ask for advice if needed.
Value Engineering
Rising construction costs and interest rates can lead some developers to cut corners on quality, a process known as value engineering. When I represent buyers, I include clauses to ensure the promised level of quality is maintained.
Conclusion: The Untold Truth About the Miami Pre-Construction Condo Market
I’ve thoroughly analyzed numerous new condos and will continue to do so. There are some I genuinely love and recommend, while others I choose not to cover at all to avoid any potential legal issues. I’m candid and unfiltered, only offering positive insights when I truly believe in a project.
If there’s a specific condo you’re curious about that I haven’t reviewed, feel free to ask why. I report on the good, the bad, and the ugly, and I’m here to help you make informed decisions.
And Now for the Bright Side: Miami Condos Worth Your Attention!
Please find a link to our top 10 picks of new construction condos in Miami that we believe do not raise any red flags and are very bullish about.
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