Top 8 Insider Tips for Buying Presale Condo As An Investor
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Purchasing an investment property can be one of the best investments you make. It can also be a headache if you aren’t prepared. With these tips, you can ensure that your experience is a rewarding one.
This post will be the first in a series of tips to help you learn everything you need to know about buying your first presale as an investor
1. Get A Pre-Approval
Pre-approval means that your bank or lender has given you an official number for your loan. This way, when it comes time to negotiate with the seller and sign on the dotted line, you’ll have an idea of what you can afford and what type of mortgage you qualify for.
Having this pre-approval number early on can help you plan ahead and will save you a lot of time and stress. If your current budget is not enough, you can put a plan in place for when completion comes a few years down the road.
Banks like BMO have amazing presale products to help you qualify for a presale that completes in the future
2. Know the Numbers Inside-Out
Before making any decisions about buying a rental property, make sure you have all the numbers worked out first. What will your rent be? How much will it cost to maintain and repair the property? How much is the assignment fees? Which units are properly priced well in a presale project? What sort of return on investment (ROI) can you expect? These are all questions that must be answered before purchasing any real estate.
Rental properties take time to appreciate, and even then they won’t be worth much unless they have positive cash flow (i.e., they bring in more money than they put out). If that sounds like a good fit for your needs, read on!
3. Location, Location, Location !
Buying a pre-construction property as an Investor that you will rent out is an investment is like any other investment, you need to do your research before you make the purchase.
When shopping for your ideal presale condo in surrey or any area in the lower mainland in BC, you probably chose the nicest neighbourhood you could afford. The following factors can narrow down should help you narrow down a potential high ROI real estate
- has a high percentage of employment (anything below 50% is low)
- is not governed by a homeowner’s association (fees and restrictions will absolutely decimate your profit margins)
- has a relatively low crime rate
- has very few vacant properties
- is located near amenities such as highly-rated schools, community centres & parks
- is close to public transportation
- has close proximity to highways and major city centre hubs
Buying presale property means you won’t be able to do an inspection before making an offer on a home — so it’s important to do as much research as possible beforehand! Check out the neighborhood by driving through it several times during
4. Consult with Professional Property Managers
Consider working with a property management company. If this is your first time investing in presale real estate or if you’re not sure how much time and effort will be required on your part, consider working with a professional who can manage your investment property while you sit back and collect rent checks each month.
Consult with Ipresale Condos Property Manager. As one of Surrey’s leading & experienced Real Estate Company, ipresale condos can take the stress out of the Real Estate Investment Equation to get great tenants who will be given a set of expectations of how to upkeep & maintain your investment property.
5. Don’t be Limited to Hotspots
You don’t necessarily need to buy a rental property in your own neighbourhood or city. If there is an area that is experiencing growth and development, then that might be a good place for you to look.
For example, if you live in West Vancouver and want to invest in real estate, then perhaps you should consider moving out of the city and into Surrey or Langley. These cities are experiencing rapid growth right now, so investing in them would make sense
6. Shop for Lower Interest Rates & Better Mortgage Options
Look for a low-interest mortgage or first mortgage that has no closing costs or fees (such as application and appraisal fees).
Ask an Ipresale real estate agent for help with this step. You may also want to consider alternative financing options such as hard money loans or private money loans in order to finance
7. Have an Exit Plan
Presale investments have considerable potential to boost your income and foster long-term growth in your personal wealth. However, you should always keep unexpected future developments in mind.
Have a way out in case you’re not able to close on the preconstruction property or any unforeseen situation presents itself.
That is why having an agent in your team that can market your home using all available resources and methods becomes significant. Ravi Bhindi has helped clients that have been in situation of financial distress before closing.
8. Understand Assignments
An assignment is when a Seller (assignor) sells their interest in a property before they take possession – in other words, they sell the contract they have with the Builder to a new purchaser.
Read More about assignments here
It’s important to understand, that a lot of developers may or may not allow assignment of contracts. If they do allow an assignment of sale there might be a small fees associated with that. So it’s important for a realtor and the investor to read the contract thoroughly before signing the dotted line.
Final Thoughts
A lot of good advice comes from someone who has been down that road before. Having an Experienced Realtor is one of the main reasons people buy into a presale.
A presale veteran like Ravi Bhindi will often know what’s going on with the building, and will tell you about any mistakes that may come up along the way to completion.
Give Ravi a call at 604-825-8881 to discuss any presale real estate matter or contact us by clicking here
