Are you Considering Pre-constructed properties ? Think again.

Buying a property that doesn't exist yet, may sound risky and for sure you must know the minor details .  Freehold or Condo pre-constructed options could be a great investment.

Some buyers may feel deflated or lose their optimism when dealing with a seller's market, such as the one we have been currently experiencing in 2020-21 and consider the idea of buying a preconstructed property , this will pose a different ball game on your table, therefore let's it break it down.

The payments 

When it comes to pre-constructed properties tipically you will be asked a 20% deposit , now have in mind this is not mandatory and it's based on the builders discretion ( this could be less) ,  this deposit will be broken down in 3 or 4 different installments , that could be scheduled as follows , 5% within 30 days of purchase, then another 5% after 90 days , then another 5% after 1 year and finally the last 5% ,about 30 days before you move in. That is a hefty chunk you will have to pony up before you even move in and stop paying your current mortgage or your rent. But for the ones who have the means of it, let's continue breaking it down.

The possession expectancy

One of the biggest advantages of buying a pre-constructed property is that you have no bid war to stand , then you can save your energy for another set of curveballs that you may encounter along the way.  hypothetically imagine that you were told initially , the construction was about to start and new owners will start moving in within a year and half. Little you know, that it's been a year since you signed your agreement and they haven't even dug the wholes in the ground for the foundation pouring and the move in date has been pushed back 3 times. At the end, you are finally ready to move in 2 years and 11 months after,  married and with a baby. Definitely not every single transaction is the same and some builders do meet their due dates on time according to the plan, but it's important to have realistic expectations .

Other things to oversee

• Be smart on you upgrades spenditure:  when you buy a property you will be provided with a selection of finishes to pick from (sometimes limited) and there will be other upgrades with much higher prices.  Remember that even though is nice to have a move in ready property with the finishes you love without going through renovations to deal with, this will come with a higher price tag, this is how builders also make other profits from buyers. 
• Your property value may have gone up or not:  in our hipothetical scenario, you were given possession of your property in about 2 years in 11 months, in our ever changing real estate market , things could drastically change , in some instances the values have gone up to 39% and sometimes even more. 
• Your mortgage rate could be different that the one you expected: have in mind that after almost 3 years later in our scenario, you will have to come up with the rest of the purchase price of the property , it is only then that you apply for your mortgage and by then, the Prime rate may be different. Also , you could be looking to a low ratio loan, if you provided a 20% deposit or a high ratio loan if you provided less deposit. Usually lenders , provide better interest rates to high ratio loans, given that those are insured.
• It is imperative to obtain a good real estate lawyer to foresee the legal details.

Overall, the investment on a pre-constructed property is great as long as you know what you getting your hands on, if you have the funds and the necessary patience to deal with the back and forth of this particular buy,.

Feel free to contact me if you are interested in investing  in real estate, don't hesitate to send a message or commet on this blog or any other.  Remember you might be closer to buy than you think.