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  • Writer's pictureOscar Romero

4 Reasons To Buy Pre-Construction Real Estate

With the lack of housing inventory, pre-construction communities and buildings continue to sell out at a rapid pace. The steady increase in price points for housing has made the purchase of new builds more attractive for both investors and would be homeowners. Below I touch on the 4 reasons to buy pre-construction, real estate and why it just may be a more attractive option for home buyers.

Price and Warranty

The first advantage to buying a pre-construction property is the concept of buying cheaper today for the return of a future price. This is the “reward” for the buyers, since they are taking most of the risk.

On the topic of risk, you should keep in mind that not all projects and builders are the same. We’ve all seen the horror stories of builders not delivering on their commitments. When you purchase a new home, there is a warranty (Tarion) that covers work and materials and protects your home up to 7 years. This protection provides buyers with a peace of mind when purchasing their home.

Deposit Structure/Savings

Buying in the pre-construction phase gives the buyer time to save more money while receiving a higher return on their initial deposit. Builders usually break down the deposit into percentage installments that stretch out over a period of time. Meaning your initial deposit may be 5% and then six months later is your next installment.

This is much different than buying an already built property where your down-payment is all up front. Not having to pay a mortgage and the extra time to save money is a great positive, especially in the current market.

Return on Investment

From an investor lens, the option of “parking” your money (deposit) on a home without having to pay a monthly mortgage serves as a low-risk investment opportunity. The right project in the correct location will yield lucrative returns on the buyer’s initial investment. Housing will typically appreciate at a rate that is higher than the original builder’s price. Whether you are planning on selling, renting, or moving in, the market value of that property could be higher.

Less Stress

When buying pre-construction property, you can save a lot of headaches that come with the purchase of a home. That’s right, no more bidding wars! As opposed to competing with other buyers; purchasing new builds gives you an opportunity to visit a sales center and even choose the models and finishes that you are interested in. There is the added benefit of not having instant repairs. Typically, already built homes will have some level of maintenance and repair work that will be needed. A new home won’t come with the same wear and tear.

Final Thoughts

These are some quick and dirty pros to buying pre-construction real estate but it is still highly recommended that you do your own research. Look up the builder, see what other projects they’ve completed. Look out for hidden fees. Hire a real estate agent that has the knowledge and expertise with pre-construction sales to minimize the risk on your investment. Make sure that you buy with a reputable builder to avoid any surprises!

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