When it comes to real estate investment, there are many factors to consider. One option is to buy pre-construction condos. Here we will outline the pros and cons of this buying pre-construction so that you can make the best choice for your needs.
The Pros of Buying Pre-Construction Condos
Price: When you buy a pre-construction condo, you are generally paying below market value for the unit. This is because developers need to sell a certain number of units to get construction financing. So, they price their units below market value to attract buyers and reach their sales goals.
Investment Potential: Another pro of buying pre-construction condos is the investment potential. Once the building is completed and people start moving in, the value of your unit will likely increase. If you decide to rent out your unit, you may be able to charge a higher rent than what you paid for the unit due to the increased demand for rental units in new buildings.
Location: When choosing a pre-construction condo, you also get to choose the location. Developers often build in upcoming or trendy areas so that they can attract buyers who are looking for a good investment. By doing your research, you can find a pre-construction condo that is in an area with good schools, public transportation, and city amenities nearby.
Options: When you buy a pre-construction condo, you often have more options than if you were buying an existing unit. For example, you may be able to choose the finishes for your unit such as flooring, countertops, and cabinets. In some cases, you may even be able to choose the layout of your unit if there are multiple floor plans available.
Amenities: Another benefit of buying pre-construction condos is that they often come with luxury amenities that existing buildings do not have such as concierge services, fitness centers, rooftop decks, and business centers. These amenities make it easier to attract tenants if you decide to rent out your unit and can also add to your enjoyment if you decide to live in the unit yourself.
Flexibility: A final advantage of purchasing pre-construction condos is that they provide greater flexibility than other types of real estate investments, such as single-family homes or commercial properties. For example, if your financial situation changes or you need to move for work, you can easily sell your unit before it is completed without losing money on the deal. You can also rent out your unit if you decide not to move in right away.
The Cons of Buying Pre-Construction Condos:
Risks: One of the biggest disadvantages of buying pre-construction condos is that there are many risks involved, such as construction delays, cost overruns, or the project being cancelled entirely, which would result in the loss of your deposit. If this happens, you may not be able to get your deposit back or recoup any other money that you have spent on the project, such as appraisal fees or inspections. Before buying a pre-construction condo, make sure that you do your due diligence and research the developer thoroughly so that you are aware of any risks involved.
Hidden Costs: Another downside of investing in pre-construction condos is that there may be hidden costs involved, such as development charges, closing costs, or GST. Be sure to ask about all potential fees before signing any contracts so that there are no surprises down the road.
Noises during the construction phase: If you live close enough to the construction site, there might be some noise due to developers working on site. There might also be some pollution from the construction process itself. Make sure to factor this into your decision-making process before buying a pre-construction condo.
Weighing the pros and cons carefully will help decision-makers decide whether to buy a pre-built condo. Although there are risks such as hidden costs such as noise pollution from the construction phase, purchasing a pre-built condo can still be profitable because one can live in or rent out the unit and resell it later for a higher profit depending on the market value at the time.
