Companion to: Real Estate Decoded Chapter 32 (Condo Pre-Sale) - Workbook tab 15_Condo_Presale
Inputs
Outputs
Pre-sales needed (lender threshold)
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Months to hit threshold at current pace
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Construction loan size
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Sponsor equity
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Total project gross revenue
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Project gross profit
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Loan threshold met by start?
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How to read this tool: Construction-loan lenders require pre-sale thresholds (typically 40-60% of units pre-sold with non-refundable deposits) before funding construction draws. The pre-sale velocity must clear the threshold before the construction-start window or the deal restructures. This tool gives you the math.
What this tool is for
Condo development with international buyer pre-sale (Miami, Manhattan, San Francisco, LA) requires sales-velocity discipline that conventional multifamily doesn't. The lender's pre-sale threshold gates the construction loan; the velocity gates the lender. International buyer-pool risk amplifies the velocity uncertainty.
Benchmarks the practitioner watches
- Lender pre-sale threshold: 40-60% of units sold with 20%+ non-refundable deposit
- Pre-sale velocity in strong markets: 8-15 units/month per project
- Pre-sale velocity in weak markets: 2-5 units/month
- Construction loan LTC: 50-65% for condo (lower than rental MF due to single-cycle risk)
- Required gross profit margin: 25-35% to compensate for the single-exit-window risk
Common mistakes
- Marketing velocity = actual velocity (the sales-center claim vs. signed-deposit reality)
- International buyer deposits at risk of regulatory or geopolitical reversal
- Pre-sale price inflation that doesn't survive to closing (settlement-period appraisal kills closings)
- Skipping the deposit-recovery litigation risk if the project delays beyond contract dates
Educational reference only. Not investment, tax, legal, or real-estate advice. Confirm market-specific cap rates, lender terms, and tax overlay with your own advisors before acting.