Buying before construction is finished, smart or stupid, what do you think?

[PowerFlower Junior Member Find all posts View Profile Close PowerFlower]

I have recently moved part time into Nuevo Vallarta, Mexico, and there is so much construction going on here: resorts, condos, gated communities, and I’m thinking: “The Economy is bad, The Markets are bad, so who’s gonna buy all those houses?” And we’re talking about hight-end, really beautiful homes, but its $400,000 USD and up. And if you can’t do that then it’s Fractional ownership, or just a few weeks a year. And I just can’t believe they sell’em off the street, to some couples who got sucked-in to a “free breakfast”… How many here have went on a Fly and Buy? Before I moved here part-time, I was offered to buy into a new project, but all I saw was computer models, nothing was build yet.
I didn’t bother. Maybe it’s just me but I’m hesitant to buy before it’s finished. Is it smart of me, or stupid?
I can be acting cautious and avoiding risks or it can also be that I’m missing some great investments that might get sold out and only rise in price later. what do you think?
I What do you think?

[timeos2 Senior Member Find all posts View Profile Close timeos2]

Not too long ago it was a way to get "a deal". Now it is a VERY big risk that the development will ever in fact get completed. Today I would not take the chance on an unfinished building (unless it was just a few finish items in a unit / house in an otherwise open & operational building / subdivision).

[chriskre Super Moderator Find all posts View Profile Close chriskre]

Wouldn't do it then and definitely won't do it now.
But then again I'm pretty conservative.

There are many unfinished projects here in my town when the game of musical real estate chairs was up. Not a pretty sight to see an abandoned construction site and I'm sure the earnest money is gone too.

[rikkis_playpen Diamond Club Contributor Find all posts View Profile Close rikkis_playpen]

An attorney for a major developer once told me a story about a discussion with their vp of sales.. The VP was upset that construction was moving ahead of schedule.. Said it was always much easier to "sell the dream" when nothing was built, because no matter what the mark wanted- you could tell him it was part of the plan.. Once it was built, you could only sell what was actually there...

I'd wait..

[Pstreet1 Senior Member Find all posts View Profile Close Pstreet1]

In our part of Mexico, the rule of thumb is "If you like what you see and would be happy with the price if nothing more is done, buy it and anything else you get is a bonus. If you don't feel that way, don't buy." I've seen lots of projects go belly-up and people get only part (or nothing) of what they put down on their unit. I think you're smart not to buy yet.

[Glitter Brunello Super Moderator Find all posts View Profile Close Glitter Brunello]

No way.

[gandalf252002 Senior Member Find all posts View Profile Close gandalf252002]

Have to agree with most of what the others are saying.

However to play devils advocate like anything else you have to take risks to make money. Do you research, find out more of the developer, the books at hand treat it as if you were investing in the stock market. If you do you dule dilligence you might work out all right. It is all about risk management here, what are the chances the building will never come to fruition?

If the Facebook creator told you he was going to become a billionaire off something that acted like a GPS and let you tell the world what was going on in your life would you have believed him?

If a site like groupon said "we are going to be the quickest company to a billion dollars selling advertising and get and offer from google to be bought for 6 billion" would you have believed them.

[GrayFal Silver Contributor and supermoderator Find all posts View Profile Close GrayFal]

With todays economy, I would feel MUCH more comfortable buying in an established community/condo building with all amenities in place.
Walk around the building/development and talk to other owners, see how happy they are with management and the fee structure of the ownership.

In this case, buying "used" is better then new

We have a member here who has a nice golf course/marina area condo in Nuevo Vallarta for sale in an established, well managed/maintained community - pm me if interested in contact info.

[rikkis_playpen Diamond Club Contributor Find all posts View Profile Close rikkis_playpen]

Timeshares are not a financial investment..

Never forget.. Timeshares are not an investment- and should never be purchased with that in mind. Timeshare ownerships do not appreciate over time, so regardless of when you purchase (be it pre-construction or even resale for that matter) the timeshare buyer should expect in almost every case for the resale value to be less in the future than it is now.

All vacation ownership programs should be purchased with the sole intent of usage and enjoyment.

Have to agree with most of what the others are saying.

However to play devils advocate like anything else you have to take risks to make money. Do you research, find out more of the developer, the books at hand treat it as if you were investing in the stock market. If you do you dule dilligence you might work out all right. It is all about risk management here, what are the chances the building will never come to fruition?

If the Facebook creator told you he was going to become a billionaire off something that acted like a GPS and let you tell the world what was going on in your life would you have believed him?

If a site like groupon said "we are going to be the quickest company to a billion dollars selling advertising and get and offer from google to be bought for 6 billion" would you have believed them.

[gandalf252002 Senior Member Find all posts View Profile Close gandalf252002]

Point taken, and I agree they are not an investment. However there MAY be benefits by purchasing prior to completion. Sometimes developers will offer incentives during the construction phase in order to raise capital. These means properties go for less then upon completion.

Although not technically an investment, you pay less in the beginning you have less to depreciate in the end.

I definately am taking advantage of all the contracts I have purchased. However like I am sure everyone else here has they have either made money, or traded up by renting or depositing their weeks.

If I can make a little extra money here and there to further reduce the cost of my vacations than I do not think that is a bad thing.

My point was to not follow in my footsteps, and do more research! If everything works out alright I might get out of this predicament unscathed without any losses.

Never forget.. Timeshares are not an investment- and should never be purchased with that in mind. Timeshare ownerships do not appreciate over time, so regardless of when you purchase (be it pre-construction or even resale for that matter) the timeshare buyer should expect in almost every case for the resale value to be less in the future than it is now.

All vacation ownership programs should be purchased with the sole intent of usage and enjoyment.

[JWC Super Moderator Find all posts View Profile Close JWC]

We bought our first Coastal California timeshare long before completion 24 years ago. We actually bought into the Glen Ivy PSE system which was a pioneer in mini systems. It was a great system and the PSE system still exists though Glen Ivy went bankrupt many years ago. Our home resort we bought at was not completed but we wanted that particular resort due to the location. We were very familiar with the area.

As I expected, it turned out very well.

Our second timeshare we bought when it first opened. Again we wanted that particular location. It has also turned out very well.

Our first timeshare was located 5 hours drive from our home and our second one was just a 30 minute drive.

[1950bing Senior Member Find all posts View Profile Close 1950bing]

Stupid

[JWC Super Moderator Find all posts View Profile Close JWC]

Stupid

This is a very informative post.

[PowerFlower Junior Member Find all posts View Profile Close PowerFlower]

thnks to all you guys!

All right, thx to all you guys, this discussion was defiantly helpful, me and Hubby spent a nice evening on the terse talking it over. Our conclusion remains the same: If we like it A lot, believe in it, like the location, and the developer resorch shows he’s Kosher, then Yes, maybe. Then again, How the heck do you do your due diligence in Mexico?? But that’s another matter…
Thank you all again. And if someone wants to start a thread about performing due diligence on Mexican developers, I’m defiantly interested in reading it!

gandalf252002

No! I definetly would not have belive and invested with them… And id you?...

Pstreet1
Thx. About Rosarito, how is it ther? Would like to come visit, but honestly, to sceard about the border violence..

GrayFal
Thx, but we are keeping our options open. Not shure at all I want to live in the Nuevo area, might do Bucerias or Mita. But thx!!

gandalf252002
We have a similar way of thinking.

[chriskre Super Moderator Find all posts View Profile Close chriskre]

So were you talking about buying a house or a timeshare/fractional?

I've purchased a TS before the project was completed but that was from Disney and I didn't have much doubt they'd finish it.

I also purchased a TS preconstruction years ago but rescinded it because there were too many outs in the contract and the developer never did finish everything promised but the project still turned out okay in the end minus all the extras they promised.

These days it's just too easy to file bankruptcy and keep the down payment. If you have a doubt about the developer I'd proceed with extreme caution.
You can always buy a foreclosure later.