Thinking of investing in pre construction condos? The good news is this: pre-construction condominiums make for an extremely sound investment decision, whether to rent out or purely for investment purposes. But just owning a pre-construction condo doesn't make you any cash, and in fact, in many cases, it becomes a liability because the property isn't up to code and you're stuck holding the bill for damages you cause to the condo. So what's a smart pre construction condo buyer to do? Get some cash up front before the construction of the unit begins by purchasing some sort of financing.
This seems like an odd way to go about pre construction condos, but there are a number of reasons why it can be a great way to get started in the condo market. One reason pre-sale condos are a smart way to go about making an investment is that the builders are eager to close on the units they are selling. Condos need to be sold quickly to meet demand, and that often means pre construction condos that have just come off the building sites. That means a number of defects, damages, or whatever issues are on the property so it needs to be sold as soon as possible. These units will often be a lot less expensive than something a little more costly when it comes to fixing the problems, but that means less cash for you and a higher risk. That's why pre construction condos are such a good investment opportunity for investors.
The Pierre Carapetian Group buy units from you while the units are still on the ground, then you'll have an easy cash flow source. This is why pre-construction condominium investments are so attractive to companies looking to raise funding. They can take the risk of needing extra financing and not knowing until the units hit the market how much demand there will be. A private investor would do well investing in pre construction condos. However, this is not always the case because there are some risks when dealing with these types of investments. Check out this post that has expounded on the topic: https://www.encyclopedia.com/social-sciences-and-law/sociology-and-social-reform/sociology-general-terms-and-concepts/home.
One of the risks is having a contract that you are not completely happy with. In many cases the developer has complete control over their developments before final closing. However, if the builder defaults on the loan and fails to finish the project then the investor is responsible for any and all costs including legal fees, development fees, and final closing costs. It's important to remember that the developer is going to want to recoup as much of their investment as possible and they are going to be willing to use all means necessary to ensure they receive that. If you can't agree on all terms of the contract it's best to move on and find top realtors who does.
Another risk associated with pre construction condos is the possibility of increased development fees. These fees can add up after the fact so it's best to purchase in advance of time. Some developers may charge extra for pre-sale condos that are ready to be opened for the public. These fees can be expensive so it's a good idea to purchase in advance. It's also a good idea to hire an attorney who specializes in condo law so you're in good hands from start to finish. This way there are no surprises if there are unexpected expenses.
The last major risk of pre-construction condominiums is being left on the market long after the developer has moved out. Most buyers are eager to get in on the ground floor and begin enjoying the luxury of owning a home but sometimes this is not enough to encourage all interested parties to close on the deal. If this happens and you are unable to close the deal on time then you may have wasted your investment and any chance of obtaining interim occupancy.