Benefits of pre-construction condo investment
Of late, living in condominiums has become a way of life particularly for people who work in downtown offices of large cities. The popularity of the condos is so high that it gets sold out even when they are in the development phase. Buying pre-construction condo investment is lucrative but it is also riskier investments that one can have. There are a lot of benefits when you buy them and one of them is the amount of money which you have to pay in contract with an already completed unit. Prices of the condos are just a fraction of their actual value when completed. Once the construction is over, the amount that was pegged during the pre-construction could easily double and you can make a good profit if you sold the unit that you bought upon its completion.
Another benefit of pre-construction condo investment is that you can alter the interior design of the unit you bought i.e. you can have your own design incorporated in the interior of your residential condo unit. You can even change the wall panelling, flooring and can even reposition some fixtures such as bathtub in case if you have bought it during the pre-construction phase. Some of the projects come with smaller deposits i.e. 5%, 10% or 20% and are spread over time. Your return on investment (ROI) can be quite high as you have to pay only a small deposit and the length of time the property has to appreciate. For example, if you buy a $500,000 condo pre-construction and put a 10% deposit and you close on the purchase for four years later, the property will appreciate by 20% per annum. So, the value of the property will go up by 10% ($900,000) deposit. Of course, closing costs must be factored into this calculation to achieve exact numbers.
If you get into a project early enough (Plantinum phase or VIP) you can benefit very quickly from an increase in value since the developer usually increases prices as time goes on. If the demand for the condos is high, then you can assign your contract to buy the unit to a new buyer. The profit is the difference between the actual cost of the purchase from the developer and the price actually paid by the buyer now.
Thus, the pre-construction condo investment comes with the above-said benefits.
If you’re considering investing in a new condo, browse our now selling pre-con listings.