Investing in a Pre-Construction property is a strategical long-term investment that is capable of yielding a huge profit for the investor. Like every other form of investment, real estate also has its ups and downs. But unlike other investments, real estate doesn’t take you down with it. When the market is dull, you can wait out on the option of selling your property and can put it up for sale when the market is soaring. This way, you can be in complete control of your property investment. Let’s shift our focus to pre-construction condo investments. It’s an already proven fact that investing in a pre-construction condominium project can be quite beneficial. You can save up quite an amount in the case of pre-construction properties. Let’s discuss a few of these perks.
Although pre-construction condo investments might demand higher initial capital as compared to the rest of the investment options, you can undoubtedly expect a higher return of investment in the end. Let’s talk about the leverage when you invest in pre-construction condominium projects. When you opt for a mortgage from the bank, the bank usually covers 80% of your expenses while you spend the rest 20%. You’ll only have to pay back the bank over a course of many years – at least a decade and with pre-construction condos, even the down payment doesn’t demand you to pay up all at once, rather in different stages. Thus you would have a track of your finances and complete control over it as well. You don’t have to worry about paying a fortune all at once. This leverage that you have while investing in pre-construction properties will aid you in earning a high ROI.
Another major advantage that comes with a pre-construction property is the real estate appreciation. We already talked about the leverage in pre-construction real estate investment. A condo unit will be appreciated in the market based on its 100% value even though you’ve only had to pay a 20% down payment. If the value of your condo increases, so shall the return of investment. When it comes to a pre-construction property, the value of the same will only increase later as it nears completion (considering the characteristics of the real estate market). So, if the value of your property increases by 10%, the return of investment that you can expect would be five times more.
With a pre-construction property, you have plenty of time till the completion to find a tenant. And renting out the property is a fabulous option because then you wouldn’t have to worry about the mortgage as you can have your tenants pay them. If it was a resale condo then you’ll have to deal with the mortgage expenses right after you buy the property and if there isn’t a tenant, then be prepared to pay all that money yourself. You don’t have to start paying the mortgage of a pre-construction property till it completes Construction and that is a huge financial advantage.
If you fix the rent for your property including the mortgage charge, then you can earn a steady monthly income. This ensures positive cash flow every month. Renting out your property after completion is the best way to get a high return on investment. You can get a hold of a high return of investment as you rent out your property for 5 or 6 years since its completion. After that, it is best to sell your property when the market is right. A pre-construction property also lets you claim a lot of tax advantages. And even after you sell your property, you’ll only be taxed on 50% of your capital gains. All these points lead up to the same fact – that pre-construction condo investments are the best kind of investment for the future as you get away a lot more for what you spend.