Why you should consider investing in pre-construction condos

Many investors are increasingly interested in the real estate market because it’s performing pretty well.  This is the reason why purchasing pre-construction is a great way for any person to invest in a long-term investment vehicle that is considered to be passive. It can also be a good thing for first-time home buyers to get into the real estate market. If you intend to buy new condos, then you will be pleased to know that condo sales have increased exponentially recently. 

Understanding the preconstruction is crucial if you're considering investing in pre-construction condos. To grasp the concept fully, read more about the meaning of preconstruction which will empower you to make informed decisions regarding your investment in the real estate market.

No wonder, there are now many investors looking to buy pre-construction condos because competition has also grown. Even better, the condo occupancy rates are also quite good as there is a high demand for them. This post discusses why you should consider investing in pre-construction condos.

An extended deposit program 

When buying a new build condo, you will find that the deposits vary between 15 to 20 percent and are usually spread out. The payment can sometimes extend over 18 to 24 months. In most cases, if you don’t have to put down this 20 percent upfront, it allows you to save up. There are some situations where you can use a line of credit to get further spread out on the payment deposits but this is not always available to all property investors so it is worth looking carefully at your options first.

During the 3 to 5 year period it takes to construct, other than you paying the deposit, you have no mortgage obligation until closing. The mortgage comes in only on closing. As a result, you can own pre-construction real estate but it may not appear on the credit bureau. Even better, this can allow you to have the flexibility of owning a condo without affecting the debt ratio or even your chance to access debt from any lender in this period. 

When it comes to the first-time buyers, this extended deposit program and period it takes to start and complete constructing a condo can allow you to save up. Many of these first-time condo buyers regard it as a forced investment or saving strategy. After all, it is always easier to save some cash when you know that there is a condo you need to pay for. This financial planning becomes even more crucial when considering factors like the need for a structural integrity reserve study in Florida. As part of responsible condominium ownership, such studies ensure that the property's structural elements are well-maintained, and an extended deposit program can contribute to a secure and financially manageable path towards homeownership.

Gentrifying is your best option

Purchasing a pre-construction condo is like you are purchasing futures in the stock market. Therefore, you can purchase at today’s prices believing that in the future, prices will go up. Historically, long-term prices of properties tend to go up. So there is a good chance that you can improve the odds of appreciation by getting properties in gentrifying neighborhoods. 

This is where key infrastructure or even transit is scheduled to be constructed. Since the property you intend to purchase may not be available for at least 3 to 5 years, then it makes sense to get a new condo in an area that is rising. These neighborhoods can have a lower buying price entry point and also a higher potential to be more successful than the other markets. 

Hands off

While owning or investing can be lucrative and exciting, owning real estate can usually be a hands on experience. Therefore, there are many potential investors and buyers out there who avoid this opportunity. One of the huge benefits to purchasing pre-construction property is the 3 to 5 years, the period when the construction can be passive.

When the construction is done, you can get a qualified realtor to rent out your property. Also, a realtor may even manage your property for an affordable fee. With this in mind, all building maintenance issues that come in the couple of years have a warranty. This applies to all new constructions, so they can sometimes have a warranty of up to 7 years. Remember that this type of warranty and protection to a resale cannot extend out for a new build. Hence, running a small condo can take minimal time. ‘

There is a civilized process

Oftentimes, when buying resale, you can find many desirable condos that sell in fierce bidding wars. This can usually come with last minute decisions that may sometimes be based on emotions. In these types of situations, you need to make a competitive offer that has no conditions to succeed purchasing the property. 

But when purchasing pre-construction, you get what is called a 10-day cooling off period. Therefore, during this period, you have the chance to review the buying information with your attorney, realtor, lender, and financial advisor. You can also use this period to do more due diligence on the area and builder. It’s a far more effective process that allows you to assess this investment opportunity.

A new property is better

When it involves the resale condo market, buyers and renters can get distracted by the shiny and new property. Because of this, many people are ready to pay a premium. But with time, buildings can become outdated and the maintenance fees can significantly rise. At this point, a condo building’s appreciation can begin to slow compared to the rest of the market. It means, when you purchase a condo today, in just a few years it can age and. 

With this, you should know that the condo is approaching the end of its prime. On the other hand, if you decide to buy a new condo, it means even in a couple of years you will still have a new property. The good news is that it will still be in high demand while appreciating and going above the market during the building period. 

This is the reason why many people prefer Toronto preconstruction real estate, and for several years pre-construction condo sales continue increasing. Home buyers and investors believe that pre-construction is a passive, lucrative, and safe way you can get property. Because not all pre-construction are the same, it’s crucial that you know the builder. When you decide to make such a huge investment like purchasing pre-construction real estate, you need to have an experienced realtor by your side. 

This means that you should find a real estate agent who has enough experience in pre-construction. This person needs to find the proper opportunities to guide you through the process.