Investing will be risky since there is always no assurance that the venture will work perfectly. In that case, the new time investors find it shaky and 50/50 at the beginning. The Fear of getting low returns and future regrets is always high. Only experienced and pre-exposed individual risk takers boldly step fearlessly.
Gladly, this article will help you shake off all the worries. G1Homes will guide you in finding the correct answers as to whether buying a pre construction home is worth the risk. You will be well prepared and set, and perhaps you might take the risk with total confidence. In this context, investing in real estate, particularly pre-construction homes, is the elephant to tackle.
What Is A Pre-Construction Home In The First Place?
At least to shed light on whether investing in pre construction light is worth it, we first have to understand what it is all about. Well, a pre construction home is a real estate project by a given developer made in a community structure and pre-sold to customers before construction. Most pre construction homes come mainly in Condos, Townhouses, Singles, and Semi-detached homes.
The developer usually brings up a master plan, location, and amenities and then advertises the units for sale. Investing in one means you will have to be extra patient for a couple of years; until then, you can move or rent out the unit as an additional source of income.
Are New Homes Worth It?
Yes, buying pre constructed homes could turn out to be very risky. But then, as previously stated, there is no sort of investment that is never a risk. The good thing about real estate investment is the good returns and future benefits. Therefore, to make it clear to you that, indeed, buying a pre constructed is a risk you need to try out, here are reasons backing the topic;
New Construction Homes Get Warranted.
A warranty on a house is something worth dying for since it helps a buyer much. Most developers incorporate this feature in many of the projects they undertake. Maintaining an entire new home is never as easy as it may sound. You will often be required to source money from your pocket to meet the repair and replacement expenses.
What warranties do is help you save money you would have otherwise spent on house maintenance. Fortunately, once your pre constructed home developers offers a warranty to your home, then all problems step aside. You will only need to file a claim and get the developer to check out any issues you have. This boosts your savings spirits, and if you live under a tight budget, a sigh of relief kicks on. Peace of mind will bring itself to you as well.
High Returns And Resale Value
Suppose you closely monitored the rent rates two decades ago. In that case, you will notice surprising enough that the graph has continuously been rising. Also, you will conclude that real estate property prices have always been skyrocketing. That means investing in real estate will rarely disappoint you.
Pre construction homes bring more returns, unlike already existing houses. For instance, the price of units in 2022 and the rent rates won’t be the same in the next five years. Pre-construction home will appreciate.
Therefore, investing in pre construction houses now will be a brilliant idea. You will get high returns once you decide to rent the unit to someone else or even resale the home.
Some Developers Chip In To Pay Closing Costs.
Another reason investing in pre construction homes is worth it is because several developers have come in to support buyers. There are many ways in which developers swing to help a customer, with the main one being the aid of paying closing costs.
Closing costs involve fees and expenses you pay your lender once you close a mortgage loan. Both the seller and the buyer can pay this fee. They are many developers kind enough who willingly pay for the closing fees. The act gets done as a marketing strategy to increase sales of the already completed units of the project.
Enjoyment Of Incentives
The government is always ready to give a helping hand in the form of incentives. These incentives motivate buyers to purchase units from given developers. The government pushes for growth and development in a specific area by cushioning the developers from huge expenses during construction.
In return, the developers convey the same cushioning to the buyers, thus increasing the sales of the pre constructed homes. Check out some of the common incentives offered to the buyers;
- Upgrade and repair credits
- Paying for closing costs and pre-closing costs
- Buying down mortgage rates
- Broker incentives
Freedom From Previous Homeowners
What makes many people eye and dream of owning their own homes is the freedom that comes along. Most homes under management have strict rules and regulations that put off many tenants. Leaving under someone else’s roof is never anyone’s wish.
The story changes once you have your place to call home. The pressure from landlords exists no more. You do not have to worry about rising rent rates, asking management for renovations, poor services by some management, etc. Buying a pre constructed home remains the only working remedy to get peace of mind.
Risks of buying pre construction homes
Paying Taxes On New Houses
Are you living in Canada and planning to purchase a pre constructed home? Then be ready to pay taxes once you plan on moving into the house. The government has regulated the taxes new home buyers pay depending on the province of choice.
In Ontario, for instance, buyers of pre construction homes in Brampton pay over 13% Harmonized Sales Tax (HST). Luckily, you can get a refund of your money only if you are eligible for a rebate. A rebate will only come in once you’ve paid an up-front, then get a refund.
Unpredictable Interest Rates
Buying pre constructed homes will require any buyer to see a mortgage loan from a lender. This loan will help you get through the investment, but you must pay it back. The payback will vary depending on the interest rates. Sadly, no one knows how the interest rates will be in the next 2 to 3 years. That will keep you in the dark.
Investing in pre construction homes is risky but, at the same time, a venture worth immense future returns. The only tricks to succeeding are in-depth market research and, most importantly, professional help. This is one journey you can never walk alone.
In case you are looking for new development projects in Canada right now, G1Homes is always there for you. Before purchasing, ensure you deal with a trusted realtor/agent, a skilled lawyer, and a reputable developer. With those three in place, you can boldly take the step and invest. Reach out and check our website at G1Homes.ca.