03/11/2022
Why invest in Pre-construction ?
1. Own 100% of an asset for less then 20%
This is the key strategy to many real estate investors. You own an asset, and all of its appreciation, by putting only a small portion of the total value down. So, your carrying costs are incredibly low versus your potential for a significant gain. Many investors use this strategy to buy in early to a project, hold it for a few years, and then assign their purchase and pocket the increase in price. This works extremely well in a market that is on the rise. Even as an end user, or an investor who is holding on to the unit, you can experience significant gains in your unit value before even moving in.
2. You have time to save for the downpayment
In pre construction, you’re paying the downpayment over the course of construction, rather than one lump sum upfront. This means you have a longer time to make that downpayment and can budget accordingly. For most projects, 20% is the total downpayment amount. But, the deposit structure is spread out over the course of the years, typically in 5% instalments, which can be very attractive to buyers who don’t have the full downpayment upfront.
3. Low Maintenance
Because it is such a new building and everything should be in tip-top shape, when you first move in, your maintenance fees are going to low in comparison to older buildings. The same goes for just general wear and tear and maintenance within your unit – there shouldn’t be anything to fix since everything is brand new.
4. Warranty
And if there is anything to fix, it will be covered under your warranty. Pre construction is covered under a Tarion warranty, or a similar warranty program. Which means that if anything goes wrong under the warranty period, it becomes rectified at no additional cost to you. This provides a lot of peace of mind to new construction owners should there be any issues as they settle in to their new unit.
5. No bidding WARS, a calmer buying experience
With pre construction, there is either a unit there for you, or there is not. And the price you pay is the price that is advertised. There is no chance for a bidding war and escalation of that price. And in this market, where there is still too many buyers compared to sellers, it is hard to find a highly desired home that doesn’t sell for more than what it’s listed at. While the buying process always involves a lot of patience, paperwork, and important decisions that involve a lot of money, the pro of pre construction is in the ease of how the sale takes place – meaning you get a much calmer buying experience.
6. Potential For Large Value Increases
Going back to the investment opportunity side of things, pre construction offers an incredible chance to see large gains in your property value. This is especially true in undervalued areas or areas that are going through large growth and seeing solid infrastructure investment. Right now, there are many areas and beyond that are seeing incredible growth. And pre construction is an excellent chance to get into these markets at a relatively low premium. We’ve run some investment seminars for clients and looked at their potential investments – and the return on investment potential is incredible for pre construction assets if you know what to look for!
Contact us for more tips ! 📲
New development Specialists
Hōmfold
(438) 869-5031
[email protected]
