Lamudi Philippines offers advice for buying yet-to-be-completed condos.
Buying a real estate requires plenty of common sense and local market knowledge. This is especially true when buying a pre-selling condo – an “off the plan’ property that is yet to be built.
Although there are advantages to buying pre-selling condos – the main one being that the buyer can lock in the purchase of the property at its current market price – these properties also come with a few risks. Fortunately, there are ways to protect yourself and your hard-earned cash.
Global property portal Lamudi offers these five useful tips for those looking to enter the pre-selling condo market.
TIP #1. Choose your developer wisely
There is a chance that a pre-selling condo once finished may not turn out to be what was promised by the developer – or it may not get built at all. However, you can count on an established, publicly listed developer to deliver on its promise. This is because such a developer is generally well-funded and has a reputation to protect, so they are less likely to default.
TIP #2. Get yourself finances sorted out
This means getting ready with your down-payment and your application for a housing loan. One advantage of having a large down-payment is that it sends a signal to a lender or bank that your finances are in order, significantly increasing your chance of getting approved for a housing loan. Additionally, when applying for a loan, choose the one offers the best rate – the one that your monthly income can accommodate.
TIP#3. Choose your location wisely
To be able to get the maximum benefit from pre-selling condos, choose locations that are soon to become exciting business districts, even though these places are still 10 year away from that. This is because buying very early promises hefty future returns. Furthermore, as these developments are soon to become business districts in their own right, the buyer would be assured healthy rental income in the future.
TIP #4. Think long term
Short-term speculation is dangerous, not just to your investment, but to the real estate market in general. Therefore, having a five-year plan – or 10 if you can – is the way to go. Real estate investment does not mean buying a property, sitting on it for a couple of years in the hope to make some money, and then getting out. Buy-hold-sell is the perfect formula for a sound real estate investment.
TIP #5. Make sure you have read the contract
Not reading a contract in its entirety can cause headaches later on. For example, a contract will usually stipulate that the condo project will be constructed in accordance with the finishes and materials. Make sure to check this clause so you won’t be disappointed. In addition, in the case of reservation fees that will form part of your eventual down-payment, contracts usually stipulate that this will be forfeited if you suddenly not to go with through with the purchase.