Pre selling Condo: Is it Worth the Investment?

 When you drive around the streets, read newspapers, or search the web , you'll see various advertisement on condominiums for sale. These advertising materials often seem irresistible due to their low down payment, stretched payment terms, and promising location that's in close proximity to almost everything you need. Indicated in these ads is that the project status which is either ready for occupancy or preselling condo.

The meaning of RFO is prepared For Occupancy. This refers to a condo unit where you'll move in anytime as long as you have completed the paperwork and settled the required payment. Preselling condo, on the opposite hand, refers to a condo unit being sold at the very early stage of development, before its completion, during construction of the property or while it's still in the planning stage. In other words, preselling condo means the property is not yet built or it is still under construction when the time the condo unit is purchased.

Preselling condos are said to permit property developers to finance the construction of the project and enables potential investors to purchase the property at affordable prices.

You might be asking yourself right now about the potential risks and the advantages of investing in a preselling condo. While it's going to seem unconventional to buy a condo property that does not exist yet, preselling condos offer investors with various benefits.

In this article, we've put together a list of advantages and potential risks of buying a condo property while it is still in its preselling stage.

The Advantages

1. Cheaper price and versatile payment terms

A lot of first-time investors opt for a preselling condo because of its lower price which can be more or less than 30% cheaper than a ready for occupancy unit. apart from this, there also are developers who give additional discount or offer flexible and stretched payment terms where the down payment can be as low as 10% payable for 3 years, with payment to be paid either by bank or the developer’s in-house financing.

If you're a real estate investor, preselling condos are an excellent investment because their market value will surely increase by the time they are completed. Some people buy preselling condos and resell them as soon as finished, for a better price.

2. Freedom to settle on your desired unit

You can definitely choose your preferred unit and floor plan with preselling condos. you'll go for the better views, easier access to amenities, and lesser pedestrian traffic .

Depending on the pre-sale contract, you'll also inspect the unit at every end of the construction phase and inform the developer of any defects or issues that need to be addressed.

3. New features and amenities

Preselling condos offer the most recent and the latest design, features and amenities that the clients can enjoy should they need to relax and unwind outside their purchased condo unit. to stay up with the modern and digital times, some condo developers offer smart condos as added security feature.

4. Excellent investment option

Investing during a preselling condo is purchasing a property at today’s price for tomorrow’s equity. Once the condo is totally finished and ready to be occupied, you'll earn a profit by selling the condo unit at the current market price.

Once the condo property is completed, you'll also rent it out and through this, you'll be able to earn a steady flow of income. during this case, it is sensible to buy a preselling condo so you can carefully pick out the unit that will be loved by your future tenants.

The Risks

1. Changes with no prior notice

A preselling condo contract will usually specify that the property are going to be constructed according to the finishes and materials described. However, the property develop still has the proper to alter these in certain circumstances without compromising the quality.

With this, you ought to be aware that these things can happen which you may not be notified.

2. Delay in Property turnover

Preselling condo contracts usually have delay clauses for delayed turnovers giving the developers overtime to deliver the project.

3. Failure of completion

The bigger risk that you can have in investing in a preselling condo is the failure of the developer to complete the project due to bankruptcy. during this case, you'll not be able to get a refund for your deposit.

4. Falling Property Market

Preselling condos are often an excellent investment because of the promise of property value appreciation. But there's also a very low risk that it will not.

That is why it is important for you to study the existing market conditions and be knowledgeable of the rental yields within the area.

Buying and investing during a preselling condo needs an informed decision. so as to avoid the trouble of having a failed investment, you ought to always remember to buy and invest in credible and reputable condo developers who have proven track record in delivering quality condominium properties on time. Read any contract carefully and consult a lawyer to guide you in understanding the clauses before you even sign it. Check on your budget and ensure that you can afford what you are planning to buy and invest on.

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If you're a first-time condo investor, you want to be very vigilant and wise in choosing the right property for you. Carefully check any offer and weigh the advantages over risks. just in case you are still not sure of investing in preselling properties, but also don't want to miss out on any of its perks, choose a reputable land developer so you would not have to worry on the property you would spend your hard-earned money on.