It is important to note that not every project will be successful and there are several risks associated with pre-construction real estate. The following is a list of some of the issues that can occur in investment in pre-construction real estate:

1. Developers may fail financially;

2. Acts of god may occur;

3. Resales may not materialize in a timely manner, or at all;

4. Prices may not rise; and

5. Closings may be delayed by:

• mortgage lenders;
• unit inspections;
• developer processing;
• municipal or zoning code changes;
• material shortages; and
• state or local governmental approvals or permits, among others.

In the event that a project is not completed within the negotiated timeframe, the buyer’s original deposit plus interest (if applicable) will be returned. This risk can be diversified by investing in multiple projects.

The resale or assignment timing is driven by market conditions. Although the &O buyer benefits from several features such as the price protection and the closing protections, there can be no assurance that any unit purchased will be resold or reassigned.

Defaults by buyers will result in deposit forfeitures.