Know These 6 Things Before Investing In A Pre-Construction Condo
Pre-construction condos are a great buy irrespective of your reason for purchasing them. They can be solely for investment or even for living. Further, it doesn’t matter if you’re a first-time buyer or a seasoned buyer because a pre-construction condo comes with certain risks that have to be handled inevitably. It’s crucial to avoid these risks to make sure that your condo doesn’t become a liability in the future. Therefore, there are some things that you should be aware of before investing in a condo. It’s possible that several changes occur during the construction such as the materials being used. Knowing about such changes to prepare for the unanticipated is always a good thing.
A pre-construction condo is a great purchase because it means that you, the buyer, have the option to choose the location as well as the developer. However, the question arises as to what exactly should the buyer be looking out for while investing in a pre-construction condo. This article will answer this question and also provide you with insight into the working of pre-construction condos to make sure that your investment is a sensible decision.
Since you’re going to invest a substantial amount of your money in a condo, you must perform thorough research to understand if the condo meets your requirements. Your priority must be getting to know about your builder by asking for reviews from your realtor. Another way to do this is by searching for credible reviews online. Try learning about their previous projects, the time they took in commencing the construction, and if the construction was completed before the date of occupancy.
A major risk associated with a pre-construction condo is the cancellation of the project before the construction even begins. It can be due to rejection of development approvals or lower sales than anticipated and this is why you should always look for an experienced and reputable builder. This will reduce the chances of any unforeseen cancellation in the future.
2. Benefitting from Rescission
When you get 10 days for reconsidering your contract post-purchase, several actions can be taken to benefit you as a buyer. First of all, you should choose a lawyer who specializes in real estate so that you can review your agreement. As soon as you get a unit according to your wishes, sign up and decide on the price immediately. If you jump onto the project early then you can avoid issues like an increase in the prices, or in some cases, the unit becoming unavailable. Make sure that your account has enough funds prior to due dates as forgetting about them means you’ll need to pay NSF charges.
3. Construction Delays
It’s common to experience delays in construction due to several reasons including weather, strikes, and issues with the supply chain of materials. Therefore, it is recommended to anticipate a delay of about 8 months from the date of occupancy. The best idea would be to periodically visit the construction site to note progress and keep asking about the progress of the project.
4. Moving In
Whether you wish to rent your condo or to move in, you can do so even before the final closing. This means that even though the condo isn’t yet transferred in your name, you can still get the keys to it. By this time, the completion of the building has usually been completed and the necessary requirements associated with all the inspections are passed. During the interim occupancy period, you make payments on a mortgage in the name of occupancy fees or rent but the mortgage begins after the final closing. It’s noteworthy that you won’t be able to access the amenities of the building, including elevators and the hallway during this period.
5. Last Minute Changes
Investing in a pre-construction condo means that the builder has the right to make alterations to the building material, amenities, and floor plans. In such cases, builders commonly notify their clients about the updates. Therefore, it’s possible that you might get a different condo as compared to what you initially signed up for.
6. Higher Maintenance Fees
Since the construction of your condo might not be complete yet, the monthly maintenance fees are just an estimation by the builder. Further, an alteration in the inflation rate can also change the cost. So, while you’re comparing different condos based on their maintenance fees, do not be enticed by low fees – they are likely to augment over the course of time. It’s also important to really look into details such as where the property is located and what the climate in general is like, as this will have an effect on the amount of maintenance required. For instance, if you’re looking for property in Miami with a bay view, then it’s important that you deal with a well known construction company. Many who have invested in Aria on the Bay condos have found that management take it upon themselves to ensure that maintenance is a priority. This means that understanding in detail what the maintenance fees cover make a world of difference before you make any investment commitments.
Investing in a pre-construction condo can turn out to be a great idea, considering the low costs. However, there are certain factors that you must initially be aware of, including the builder’s reputation, rescission period, delays in construction, changes in material, and increased maintenance fees. These have been discussed in detail in this article but it’s always best to consult your real estate lawyer before making any purchases.