A New Model of Condo Financing in Miami

by Isaac Benmergui, Esq on September 13, 2012

People are snapping up Miami condos, tiny or sprawling, to get a piece of the glorious Florida sunshine and pristine Miami beaches. And they’re using a new strategy to pay for the privilege – OPM, or other people’s money.

After the worst real estate bust this country has ever seen, banks are still queasy about making loans for condo construction. Developers have instead turned to the abundance of riches that other people have and made pre-construction deals for luxury condominium towers. With amenities such as rooftop pools with private cabanas, maid, butler and chef services, and energy efficient buildings with automated parking, buyers are energy to grab a piece of the Miami real estate pie, no matter the cost or method of financing needed

New condo owners are willing to put up as much as 80 percent of the down payment with 10 percent going into an account that the developer cannot access, as state law requires. Shifting the risk to the buyer means banks aren’t on the hook for millions if the project isn’t completed. Unfortunately, if it isn’t finished, buyers will stand behind other creditors for their money. One Florida attorney described the new condo financing model as doing business with a handshake. You hope for the best.

In Miami, nine projects are already using the model to finance tower construction. 

The law offices of Isaac Benmergui helps buyers and sellers with their personal or commercial real estate needs; call 780-800-2510 or email Isaac@benmerguilaw.com for more information or to set up an appointment today.

 

 

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