4 reasons why preconstruction condos are a smart investment.

Buying real estate during a recession can be an opportunity like no other, which is just why preconstruction condos are a smart investment anytime.   Just ask seasoned real estate investors who purchased in the last one!

Many investors make mention of the generational wealth real estate helped afford them, and others look back and wish they bought more.  Although it may seem it’s best to remain fearful when news about real estate and the economy is all doom and gloom, the opposite is often the case.

Yes, home prices decline, but it results in a buyer’s market, which many real estate investors patiently wait years for.

“Be fearful when others are greedy, and greedy when others are fearful.”  ~ Warren Buffett

If one of the world’s richest men says it so – we’re with him!

Without further adieu, here are 4 reasons why preconstruction condos are a smart investment.

1. Less Competition

During a recession, the real estate market typically experiences a slowdown, with fewer buyers and sellers in the market. This means that there is less competition for preconstruction condos, and developers may be more willing to negotiate on price. Often times they may add in generous incentives in the form of extended deposit structures, design upgrades and even parking discounts.

2. Appreciation

Preconstruction condos offer the opportunity for appreciation in value. As the economy recovers from a recession, property values typically rise. By purchasing a preconstruction condo, you are essentially buying at today’s prices and locking in your purchase price for when the economy improves and values increase.

3. Rental Income

Preconstruction condos can also offer rental income potential that helps pay down your investment via mortgage payments and other expenses.  New condo units that are freshly painted, never lived in and close to transit are highly desirable and the tenant competition can be fierce!  Being in demand and in a great neighbourhood means that your unit will also likely rent at a premium.

4. Leverage

Preconstruction condos offer a good leverage opportunity, as you only need to pay a small percentage of the purchase price upfront, and then the remainder through an extended deposit structure over the course of build time. Typically 3-4 years. Meaning you have time to save up for the downpayment and do not need the full 20% down right away that resale condos require.

Even if there are reasons why preconstruction condos are a smart investment (there’s actually more!), it’s worth noting that buying a preconstruction condo during a recession does come with some risks.

One risk is that the developer may not be able to secure financing to complete the project, which could lead to delays or even cancellation.

Additionally, it’s important to do your due diligence and research the developer and the location of the project to ensure that it’s a sound investment.  You can do this by checking out reviews of their recently occupied projects.

Overall, buying a preconstruction condo in a recession can be a smart investment as it offers the potential for appreciation in value, rental income, and leverage.

However, it’s important to weigh the risks and do your due diligence before making a purchase.

As always, Abode Realty is here to discuss all things real estate and preconstruction related.

Reach out today to book a consultation.