The Pros and Cons of Buying Preconstruction Townhomes
Buying pre-construction means that the buyer invests in a unit before the project is actually built. Are you considering investing into the pre-construction townhomes? It is important that you note some basic factors about the project you intend to invest on.
These factors include:
- Surrounding Amenities
- City plans for the next 10 years
- Transit friendliness
- Parking/Garage options
- Price per square foot
- Market value
- Comparables in the same building
- Comparables on the same street
- Floor plans
- Condo amenities
- Features and finishes
- The developer’s reputation
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Pros of buying a pre-construction:
- You can choose the perfect design plan you desire for your building or project. However, you need to consider features such as appliances, finishing, paint, and flooring system.
- Preconstruction townhomes offer greater value that is second to none in the real estate business when compared to other investment options.
- The deposit structure makes payment for investors. This allows investors more time to save up.
- The pre-construction investment offer an investor an opportunity to own a brand new property, thus making it more attractive to potential occupants.
- Since the building will be new, the investor can save up the cost of regular maintenance, since most amenities are brand new. This also means no renovations for at least a decade!
Cons of buying pre-construction:
- It is important to note that pre-construction sale is subject to HST. But you might get an HST rebate if you intend live in the unit rather than renting it out.
- Also, you should know that in pre-construction real estate investment nothing is guaranteed. What you see is what you get. A promising and once vibrant developer might turn lukewarm half-way through the project and this is due to so many reasons like cash constraints etc. And in some cases after completion, the building might have a different design entirely from what was planned initially.
- Another disadvantage of investing in preconstruction is that it’s a non-liquid investment. Investors will have to freeze up capital for a period of 2-4 years before you start making it real big. One of the reasons is that these buildings take much time to be completed.
- Most times estimating the market value of a property can be a daunting task especially when the market is experiencing fluctuations in its variables.
Just like in every other business or investment, the pre-construction real estate has a fair share of its many cons and pros. This pros and cons are not supposed to deter anyone from investing, especially if the individual has the wherewithal to maneuver this cons and turn them to challenges that must be conquered. The fact still remains that the pre-construction real estate investment is a goldmine and should be given a go.