Buying pre-construction means that the investor is buying a unit before the project is actually completed. Undertaking these steps require a certain amount of foresight, good research and astuteness. More importantly, you need to get your facts right about the prospect of the neighborhood in years to come and how these prospects are going to influence your investment. Astute investors are cashing in on this fantastic and wonderful investment opportunity on a yearly basis. Don’t be left out! Contact Superior Realty Point today and enjoy great benefits.
Before going ahead with the investment, there are some factors you need to take into consideration. These include:
- Incentives – In the pre-construction real estate world, there are certain incentives that come with investments. One of the reasons why developers offer such incentives is to attract new and existing investors. They often include upgrade on counter tops, appliances or furnishings. A smart investor should not neglect these incentives; they can greatly enhance the value of an investment.
- Leverage – Preconstruction townhomes offer investors control over something with significantly higher value than the initial investment. In some cases, certain contract provisions put you in a state where you hold the right to great advantages in the whole transaction. For example paying initial payment of 10,000 for a preconstruction townhome worth about 270,000 in total gives you an edge to hold the rights to the property.
- Appreciation potential – In preconstruction real estate, your property increases in value and appreciates on a daily even while construction is ongoing. Not only that, you tend to earn more after the property has been completed
- Market Viability – The demand for townhomes in Toronto is increasing. This gives your investment massive return on investment. This can be easily achieved especially if the property is located where the demand for townhomes is in great heights.
Usually in the pre-construction real estate business, investment possibilities include as much as a 40% profit within 20 months. Let’s draw an analogy of how the pre-construction investment brings in money for the investor. Let say, for instance, the developer asks for 250,000 due on completion of the project. The investor places about 10,000 or thereabout in escrow. Placing all the initial investment in escrow is imperative in order to make sure the project is completed by the developer. But while this project is on-going, it enjoys significant appreciation while the project is being built; the property can appreciate to be worth about 270,000 during the 12 months construction period. Renting out the place upon completion and receiving monthly rent makes the property appreciate to about 300,000 in another 12 months. If you ever consider selling the property in the end, not only do you earn profit from the rental proceeds, you also gain an estimated 50,000 aside the initial investment.
Taking into consideration all the analogy above, it is now obvious why the real players in the real estate business consider pre-construction as the perfect goldmine of the industry.