18/03/2022
CTTO:
Pre-selling properties are gaining popularity in the Philippines and it’s no news how they attract a lot of investors because of their below-market value. By definition, pre-selling units are sold on the market before they are even released to the general public. That could either mean that the actual property does not exist yet or still under construction. You are presented with either a showroom of model units or brochures with layout plans. In terms of real estate, pre-selling is also known as off-the-plan properties. Condominiums and houses usually undergo pre-selling stage.
This sounds as good as buying an idea, but while there are benefits, so are risks. Before jumping into the venture, you should explore the pros and cons of investing in pre-selling properties:
1- Below Market Value
The affordable introductory price comes from the absence of the physical unit. Developers reduce the actual price by 30 to 50 percent compared to the price of a completed unit. Sometimes, they offer discounts on down payments for as low as 0%, or go even further by waiving reservation fees when the buyer signs the contract and pays in-house. Other than discounts, they also provide flexible payment methods such as in-house financing if ever the buyer does not qualify for a bank loan. Despite charging premium prices on their pre-selling units, they offer incentives to make sure that their property has a high occupancy rate by the turnover date. The lower the vacancy, the more earnings for the developers.
2 - Customize Your Choices
Ready-for-occupancy (RFO) properties usually don’t grant buyers the choice of units since the other units are no longer vacant; compared to pre-selling ones that allows buyers to select the best unit option for their taste. From an early phase of construction, they can select the size, location, level, the outdoor view, distance to amenities and reduced foot traffic, Moreover, pre-selling gives buyers the freedom to customize the floor plans and unit layout according to their preferences. Being involved with the construction lets buyers inspect the progress and ask for adjustments in advance. For newer developments, constructions are usually far more modern in terms of design, equipment and amenities. Environmentally-conscious developers attract buyers looking for advanced and sustainable lifestyles.
3 - Steady Cash Flow
When buyers decide to invest on the pre-sold properties as a rental avenue, they can choose units that are best suitable for future tenants. They provide a steady cash flow from monthly rent. Although, since pre-selling properties are sold below market value, buyers can sell it for a higher price, especially when the property has appreciated in value over time.
4 - Perfect Investment
Real estate is an ideal investment option, and buying a property pre-sell gives you room for profit. We discussed how much cheaper it is to purchase pre-sell, this price increases once the project is complete. Together with value in the market, real estate will appreciate over time. You can earn more than what you paid for. Whether you choose between rental or selling in the secondary market, investing in a pre-sell property is a definite gain in the future.
