Investing in Pre-Construction High Rise Condo Hotels in Las Vegas

There's no question the hise rise condo hotel investment concept is taking the real estate world by storm, especially here in Las Vegas. But have you given any thought as to why? Developers pre-sell individual units in their projects to purchasers and investors creating the necessary leverage and project confidence so the bank will finance their entire project. By making these units available to local real estate agents and brokers to sell, everyone's in a position to benefit. The agent has inventory to sell, the buyer purchases an investment which historically produces a great return on investment, and the developer gets the money needed for construction purposes.

For a relatively nominal reservation deposit (which is almost always refundable) and a comparatively very little down (usually 20 percent), preconstruction opportunities allow you to invest in resort-type property and tie up a significant asset without even having to close for a 2 year period. Add to that the fact there are no other out-of-pocket expenses for the entire time until closing. You pay no HOA dues, no property taxes, no maintence fees, no loan or interest payments, and maintain very little risk as well.

There are basically four clearly defined steps involved in the acquisition process for purchasing a high rise condo hotel.

First is the reservation period, which typically ranges 6 months. Here the developer provides floor plans and artist renderings to give you an idea of what the building will look like and what amenities will be provided. They usually inform real estate agents in the form of "Previews" to give them a head start with their clients. This is why it's important to add yourself to our list of qualified purchasers so you'll be the first to hear of situations as they develop. At this point, interested individuals complete the required paperwork for a reservation on a specific unit, usually a nominal $5,000 to $10,000 refundable check, held in escrow and made payable to a title company.

Once the developer is ready to proceed with the project, you have a state-mandated right of rescission period which is usually 5 to 15 days, where you can back out of your agreement for any reason whatsoever with no penalty. The specific developer will deliver state approved Condominum Documents, usually by Fed-Ex or UPS, to give you time to review them in detail. If you choose to move forward and sign the paperwork, your contract will go "hard" and you'll be expected to close on the deal without being eligible for any refunds. If you chose not to proceed, your reservation check gets refunded - so for most projects, you're really risking absolutely nothing by making a reservation in the first place.

At hard contract, you complete the documentation and provide the balance of any earnest money required (usually 20% of the purchase price) minus the amount of your initial reservation deposit which is applied to that amount. Some projects request 10% at contract and 10% at breakground, or others may accept an irrevocable letter of credit from the bank of your choice in lieu of the deposit amount. After you submit the hard contract it will take approximately eighteen to twenty four months of construction before closing. Suffice to say each developer is different and they all have differing requirements - but for the most part, you'll need 20% down total on most of the projects in town.

Once you get past the hard contract signing, then you just sit back and wait until the development is close to completion and you're scheduled for a closing. This period could last 18 to 24 months, which gives you plenty of time to accumulate the balance of the purchase in cash or by securing a mortgage. During this timeframe, you'll hopefully notice significant appreciation in the value of your unit so when the building's completed and move-in time comes, you'll have the luxury of knowing you were one of the smart ones to purchase a unit in the Las Vegas high rise condo hotel world.

Your only downside is getting into the wrong project. Contact us if you'd like to take advantage of these opportunities. We'll make sure we place you in the project that's right for you.