When it comes to real estate, the idea of pre-construction investment is actually quite a clever way in which many have made millions. The theory is really simple which is if it is the planning stage, invest in a property before. In order to get the building off the ground, those who will be building these buildings need money and investors. Investors often have the option of investing for pennies on the expected dollar before the ground is broken and when the building is complete, they can re-sell the property at full market value and pocketing difference in the original investment and the asking price. They invest, in many cases basically purchasing options to purchase, in the units, typically condo units in high demand areas.
For many builders or ‘owners’ of the property, this is a win-win situation. However, it is questionable since by selling many of the sight unseen units, the lending agents have confidence in the viability of the project as a money earner.
Unlike flipping houses, this style of investing is not nearly as glamorous, to some people. To beauty renovations, there is no beast. However, there are some things that you should remember while making this type of transaction.
- No real estate venture is ever guaranteed to turn a profit, no matter how good the advertisement is. this is typically not the best environment for pre-construction investing with the current trends in property sales, though these things tend to change on a regular basis and that market could be looking up again in the very near future.
- Networking is not the best way to break into this particular business. A lot of people would be real estate investors. Those that network with other real estate agents and also have specific interests and experiences with pre-construction investments are the ones that manage to last. In order to get more information more quickly, join local groups in addition to online groups that deal specifically with this sort of investment. At first, the costs involved might appear daunting, but for something that getting in over your head by not having a grasp of even the most basic ‘ins’ and ‘outs’ of pre-construction real estate investing, they are far less than the costs.
Develop a close-knit relationship with a realtor that specializes in this particular type of real estate investing. In order to insure future success, this could prove to be the most beneficial thing you’ll ever do. Before the realtor make it to the public sector, you should develop the right relationship with the right one so ou can get information on new properties. In the position of beating competition to the punch, this puts you in the rare and wonderful position. At receiving the rock bottom prices that are often missed by waiting too long to make the purchase, this gives you a much better shot.
Be prepared to hold onto the property for a little while if you need to do so. There are no guarantees that when the time comes you will have been able to ‘seal the deal’ is the problem with pre-construction investing. When you have a buyer that is willing and eager to make the purchase, things come up. You will need to hold onto the property for a short while and sometimes as a long-term investment in some situations. renting the property out to vacationers if it is in a high demand tourist area is one of several options, in the case of long-term holds would include. Use your realtor to help with that. Until the sale can be made, this allows the property to be earning some income. Some people use their properties as a personal vacation home for themselves, friends, and family. the important thing is that there is a “Plan B” for the property should the deal fall through and you are left paying the monthly note, in the end.
Pre-construction real estate investing provide a viable investment style that has the potential to bring in significant profits. So keep this in mind when considering your investment options because the name of the game when it comes to investing is profits. In most cases, this is one of the forms of investing that requires the least amount of capital up front.