There are various benefits in purchasing a pre-construction condo. Regardless of whether it’s a new or existing condo, they all come with their set of benefits including being affordable, offering luxurious amenities, and they require low maintenance. Purchasing brand-new property has also great extra benefits like you can choose your colors for the finishes and customizing the space to your preferences.
After all, it can be appealing to be the first person to live in a new place. However, before you decide to purchase your pre-construction condo, it’s crucial to learn and understand all you need to know about pre-construction real estate. This article discusses everything you need to know about pre-construction real estate.
Not All Condos are Equal
It’s worth noting not every condo project can be a good investment opportunity. The truth is that there are a few projects that are considered to be good projects. This is the reason why it’s important to do your research and even work with a realtor who has experience and specializes in preconstruction real estate.
Such a person can know the right builders, locations, and the unit types that may be great investments for rental returns and even future resale value. Some of the key things you should consider before starting condo projects include the experience and reputation of the builder, transit connectivity, and location. In addition, check their milestone inspection as well. You can check if the building is regulated and followed the area inspection requirements.
Do Your Research
You should also remember that you will be investing a huge amount of your savings in the investment home or property. Therefore, you must avoid taking things lightly. It’s important to do research thoroughly, especially when it comes to the builder. After all, with any partnership, it’s crucial to know everything about your partner.
Ideally, you need to know about the builder. For example, if you want it to be a joint venture, then you must learn about the builders by researching their previous projects. Find out how long it took for the builder to start construction, the time it took in the construction stage, and how long it took to complete the construction to the occupancy date that was stated.
It’s also important to learn if the contractor already has other completed buildings. You can book showings via condos that are listed on the MLS and even visit the condos and buildings. Check out the amenities and the finishes in the building as well as the workmanship.
If there is a chance, make sure that you should speak with a person who has gone through the pre-construction process with the same builder. In this way, they can speak from their experiences about the construction, sales, occupancy, and many more.
Like any other investment, there are also some risks when it comes to pre-construction real estate. One of these risks is the chance of the project being canceled before the construction starts. This can mean providing your deposit payments to the construction company over perhaps 3 to 5 years of construction phase just to realize that the builder doesn’t have the right permits.
The construction costs can also go up to make the project no longer financially feasible anymore. This is the reason why it’s crucial to always invest with experienced and reputable builders. A great source for you can be the buyer’s realtor who is representing you because they can have an experience working with the builder. Even better, you can also find other realtors who may have invested with the same builder.
Deposit Programs are Flexible
One of the greatest benefits you can get by investing in pre-construction real estate is that there is an extended deposit structure. Most pre-construction real estate requires you to make a deposit of at least 20 percent of the total buying price. Quite often, this deposit down payment can be broken down into a 5 percent installment that you can pay during the project’s construction stage of between 3 and 5 years.
There are many investors out there who prefer this extended payment plan because it allows them to make plans in advance of the upcoming payments. If you are a first-time homebuyer, this payment plan is essential because they don’t need a large amount of money on signing. This gives you time to save some cash for the upcoming payments, meaning it can be like a savings plan.
There is a 10-days Cooling Off Period
In many places, every construction real estate buyer is given a 10-days cooling-off period designed to allow you to reconsider and even withdraw from the purchase. Therefore, during this period also called the rescission period, you can take the time to do various things.
You can take this 10-days period to secure the unit. So when you sign the agreement to buy and sell, then you have successfully secured the property and the price. This is especially true in early launch days when some builders tend to increase their prices regularly with every new release of units. As you can see, it’s a good idea to make a buying decision quickly when you see a unit that you want. In such cases, you just need to sign up to secure both the price and the unit.
Keep in mind that delaying to sign up even for a couple of hours during the launch days can lead to the prices going up. In this way, there can no longer be any room for negotiating the prices with the builders. Hence, it’s always important to sign since you still have 10 days you can use to think about your investment. If you are still hesitant or you feel bad about making this investment, then you can always withdraw from buying the property during the 10 days at any time.
You can also get a review from your lawyer. It’s always important to have a real estate attorney when it comes to pre-construction contracts. Therefore, your lawyer can review the agreement related to the purchase sale. As a result, you can know any unusual costs or clauses that are included.
