Investment Strategy: Buying Pre-Construction

Vi Pavlicevich|November 6, 2020

There are various ways to get into real estate investing, and buying pre-construction in the first week of sales is an investment strategy that can get you the fastest and highest returns.

Buying a pre-construction condo means purchasing in a building that will not be completed for another 2-3 years down the road. During that time, the real estate market will likely increase, and you will see appreciation in your home while only paying the deposits on the home.

Here are three main advantages to getting in at the very beginning:

 

1. Price: The Developer is motivated to sell these units, and it's common for him to offer the lowest prices from the start in order to build interest and demand for the project. As a general rule, the sales team will increase prices in different phases as more homes are sold. The average price increase is anywhere between 3-5%. When buying early, you are able to lock in at a price lower than the value of the condo in 2-3 years when the build is completed.

 

2. Choices: Most buildings offer a variety of floor plans, square footage, unobstructed view, and floor height choices. The most desirable homes go first, and the earlier you get in on a pre-construction sale, the more options you'll have as to which unit you can purchase. When buying early, you will have an opportunity to pick the best residence at the best price.

 

3. Down payment: Deposit structure varies by Developer, but typically the downpayment for a pre-construction project is spread over many months. Most Developers require a 20% down payment spread over 3-4 payments with the last payment due at closing. When buying early, you will have a payment schedule that will allow time to raise the down payment if needed.

There is little risk and many upsides to buying early at the right development. If you are patient, and want an opportunity to enjoy market appreciation while the property is being built, pre-constructions sales may be for you.

Are you considering buying a pre-construction in San Francisco? Let Vi help you.

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