Are Pre-Construction Properties A Good Investment?
Pre-construction condos are a great investment opportunity for those looking to own property in an up-and-coming area or get in on the ground floor of a new development. However, there are a few things to keep in mind before making this type of investment. Here are the top 10 considerations when thinking about investing in a pre-construction condo.
Could there be faster appreciation?
Pre-construction condos are a good investment because you can often (though not always) buy them at a discounted price. The developer needs to sell all the units in order to start construction, so they will offer significant discounts (10-20%) off the future list price. This allows you to get into the market at a lower price point and enjoy appreciation as the building completes and condo prices increase.
Are you investing in a desirable and up and coming neighbourhood?
Pre-construction condos offer a great opportunity to invest in up-and-coming neighbourhoods. Developers are always looking for new areas to build in, so they are usually the first ones to jump on hot spots. This means that you can get in on the ground floor of a potentially trendy and desirable new neighbourhood and enjoy appreciation as it becomes more popular. This is an especially attractive proposition in real estate markets that are already hot and prices are high. You might be able to scoop up a presale in a city like Miami, for instance, at a great bargain.
What is the developer’s reputation?
When you are considering a pre-construction condo, it is important to research the developer. You want to make sure that they have a good reputation and track record. Many fly-by-night developers disappear after selling a few units, so you want to make sure that the developer is reputable and has a good track record. Doing your due diligence on a real estate developer is one of the most important steps when considering a pre-sale. If the developer has a long list of successful projects to their name, then you can be confident that they will deliver on their promises.
What is the quality of the construction?
It is also important to research the quality of the construction. You want to make sure that the developer is using high-quality materials and that the construction is up to code. There have been many cases of shoddy construction in pre-construction condos, so you want to make sure that you are getting a quality product.
What are the amenities?
Another important consideration is the amenities. Pre-construction condos usually come with a host of amenities, such as swimming pools, gyms, and concierge service. These amenities add value to the condo and make it more desirable to live in.
What is the maintenance fee?
You also want to consider the maintenance fee. Maintenance fees are the monthly fees that you pay to the condo corporation for the upkeep of the common areas. These fees can vary widely, so you want to make sure that you are getting a good deal.
What is the occupancy rate?
The occupancy rate is the percentage of units that are sold. This is important because you want to make sure that the building is not oversold. If the building is oversold, it can lead to problems down the road, such as special assessments and legal problems.
What are the bylaws?
Bylaws are the rules and regulations that govern a condo corporation. You want to make sure that you are comfortable with the bylaws before you invest in a pre-construction condo. The strata councils that make the rules are sometimes not well-liked by certain owners for a variety of reasons, including rules that are too restrictive or that raise the monthly maintenance fees.
What is the resale value?
You also want to consider the resale value. Pre-construction condos usually sell for a premium, so you want to make sure that the condo will appreciate in value. You need to ask yourself what you already know about the area in which the condo is being built and the likelihood that it will appreciate in value.
Are you prepared to wait?
Finally, you need to be prepared to wait. It can take a few years for a pre-construction condo to be built, so you need to be patient. This is not a short-term investment, so you need to be prepared to wait for the full value of the condo to be realised.
Are you getting a good deal?
The most important consideration is whether or not you are getting a good deal. Pre-construction condos are a great investment, but you want to make sure that you are getting a good deal. There are many factors to consider, such as the developer, the quality of construction, the amenities, and the maintenance fees. You want to make sure that you are getting a good deal on all of these factors.
The above are the most important considerations when thinking about investing in a pre-construction condo. If you do your due diligence and consider all of these factors, you will be on your way to making a wise investment.