What is Pre-Construction Real Estate Investing?
Same Day Carpet Cleaning Lancaster — In the real estate industry, pre-construction investments are a unique method for many people to gain millions. The idea is actually fairly straightforward. Invest in a property prior to the planning stage. Those who will be building these structures will want money and investors to get them off the ground. In many cases, investors can invest (in many cases, it’s basically purchasing options to purchase) in the units before the ground is broken, typically condo units in high-demand areas, and then resell the property at full market value once the building is finished, pocketing any difference in the original investment.
This is a win-win situation for many builders or ‘owners’ of the property in question because ‘pre-selling’ the units allows financing agents to have confidence in the project’s viability as a money generator by selling many of the units sight unseen. When buying at a significantly lower price before construction than after, investors have the advantage of selling at full market value (or above in some high demand and under saturated areas for real estate).
This sort of investing is less appealing to some individuals than flipping houses. Beauty renovations are a beast in and of themselves. Nonetheless, there are a few factors to consider while doing this type of transaction.
To begin with, no real estate venture is ever guaranteed to provide a profit, regardless of what the glossy little brochures claim. With current property sales patterns, this is typically not the best environment for pre-construction investing, though these things tend to alter on a regular basis and that market could be looking better again in the near future.
To enter this industry, networking is typically the most efficient method. There are a number of fly-by-night real estate investors out there. Last are those that network with other real estate agents and have specific interests and experience with pre-construction investments. Join local groups as well as internet ones that deal specifically with this type of investment to get more information quickly. It may appear that the expenditures required are exorbitant at first, but they are substantially less than the costs of getting in over your head because you don’t comprehend even the most fundamental ‘ins’ and ‘outs’ of pre-construction real estate development.
Third, create a strong bond with an experienced agent who specializes in this type of real estate investing. This could turn out to be the most important thing you ever do to assure your long-term financial success. By establishing the right relationship with the right agent, you can obtain knowledge about new properties before they reach the public sector. The rare and spectacular situation of trumping your opponents arises as a result of this. Waiting too long to make a purchase often misses out on the rock bottom pricing that are sometimes lost when you do so.
Fourth, if you need to, be prepared to keep the property for a while. The issue with pre-construction investing is that there are no guarantees that you will be able to’seal the deal’ when the time comes. Even if you have a customer who is willing and eager to buy, things happen. Basically, there will be times when you need to keep the property for a short period of time and others when you need to keep it as a long-term investment. Renting the house out to vacationers if it is in a high-demand tourist location is one alternative in the case of long-term holds. You can enlist the assistance of your real estate agent. This enables the property to thrive.
Without the ‘name in lights’ appeal that other types of investing have, pre-construction real estate investment is a viable investment strategy with the potential to generate big returns. When it comes to investing, profits are the name of the game, so keep this in mind when weighing your options. This is one of the types of investment that requires the least amount of money up front (in most circumstances).