Buying condos in the pre-construction stage has been a profitable strategy for many investors over the past decade. The buyer provides the up-front money and commitment to later purchase and close on the completed unit from the developer before the building is visible. This advance commitment enables the developer to secure construction financing and proceed with the project. In exchange, the developer typically offers the unit at a discount from what it would be sold at when fully completed. Investors who then sell their units near or at completion of the project may realize this gain plus any additional market price appreciation.

However, the pre-construction process can be complicated, so it pays to know exactly what you are buying and what commitments you are making. What follows is a basic glossary of terms you should know, sequenced in a rough timeline covering the condo construction and sale process. For a fuller treatment of this subject and observations on the local market and its practices, please call or e-mail me!