Getting in on the Pre-construction Boom

by : Adam Coyle



For many years investors have been seeing excellent returns on their real estate ventures. The question that many people have at this time is whether or not the investing world has been largely affected by the current state of affairs in the real estate market? It would be impossible to think that it has had no effect and indeed it has. Investors are quickly having to learn to diversify their real estate portfolios and get smart about the purchase and sale of properties. Unfortunately, dealing in real estate is no longer as "cut and dried" as it once was. It used to be quite simple, the market was incredibly strong, you bought low and sold high. No problem. But then, the market changed and lost some of the momentum that it once had, there was no longer competition for every available home! So what was the answer? Go after the homes that aren't built yet!

Pre-construction has developed into one of the best place to put your real estate dollars. With the amazing number of buildings going up in just about any city, developers are anxious to get their developments sold before the construction phase is complete. To facilitate this need, they are typically offering great incentive packages to entice buyers to pre-buy units. This kind of sale usually applies to high-rise condo complexes as with many units to sell, buyers can cover their costs quickly and buyers get a great deal on a new home or rental property. But aside from the incentives, what are the good reasons to invest in something that is not yet completed? Appreciation. The numbers show that once a complex is complete and ready to be inhabited, the value of units appreciates rapidly. It is this appreciation that is so attractive to investors and across the country many are seeing as much as 40-50% increases in the value of their properties. This makes an attractive offer to those who want to buy low and sell high. Usually when purchasing pre-construction one can find units for less than market value and with some time to breathe as most payments are not due until completion. Once completed if an investor can resell the unit for 40% over what they paid then the whole process and wait has been entirely worthwhile.