Are you thinking about buying a condo? If you’ve got the money now is a great time to buy. Prices are down and given the economy, buying property—especially in a good area—is far safer than putting your cash in stocks.
You can also earn money from renting out your condo unit (an easy way to boost your monthly income) and, if you are able to buy during the pre-selling stage you can see the value of your property double in just a few years.
1. Reviewing the Condo Market
It’s easier to buy a condo now. Many property developers are building smaller, more affordable units targeted towards yuppies or small families. These are often found in prime locations. Aside from the convenience of being near business and recreational districts the condos are also often outfitted with ‘perks’ like a pool or gym for residents.
Condo developers usually have several sizes of rooms at different price ranges. You can buy anything, from a studio or bachelor’s halfway house, to a three-bedroom unit meant as a family’s main residence. You can also buy two adjacent units and then connect them, to give you larger space.
2. Pros and cons of Pre-Selling
Pre-sold units are usually offered at lower prices, and on stretched payment planss. Developers offer these at rock-bottom rates because they use the money to help fund construction. Completed units already built have a higher price tag, since the risk of non-completion is almost nil. In short, if you don’t have that much cash on hand but have the time, you can buy a unit that is still being built instead of a finished product. However, you need to manage the risk by looking at the reputation of the condo developer. Which brings us to the next point.
3. Assessing the Condo Developer
Always do your research to find out if the company behind the condo unit you’re eyeing has a good track record of completed and successful projects. In short, don’t give your money to a developer who has never built a condominium before, as there have been developers who never finish what they had started.
The developer will also determine the condominum’s quality. Certain developers are known for quality finishes and fixtures and others are known for low-cost finishing. Naturally, the more you pay, the more you should expect.
Ask around about developments by the same company, and talk to people who live in them—are the buildings well-maintained, well-finished, well-managed? Are the roofs leaking, the security efficient?
4. Looking at Payment Schemes
What payment schemes are available? And what will I be getting for my money?
There are different payments options available to buyers, including extended payment plans. Be wary, however, of schemes asking for "only" a certain amount of money every month, usually an affordable sum. This arrangement often lasts only for a few months, and a large sum will be expected somewhere down the line. Naturally, the more downpayment you plunk down, the less you will have to pay in remaining monthly amortizations.
Usually, the selling price includes basic features such as tiled floors, painted walls, simple toilet fixtures and basic lighting. In other words, they can be lived in upon turnover. Dressing up the unit later will be up to you. A tip: When buying to live in, you may consider paying for additional conveniences to be added by the developer to make it easy to ask them to come in for repairs and additions along the way. If you're buying to rent out, keep the unit bare, and let the tenant worry about bringing in other needs like airconditioners and phone lines. That way, if you end up with a delinquent tenant, you won't be left with thousands in unpaid phone bills in your name.
5. Looking at Costs
Prices depend on the size of the unit, the location, as well as the ‘image’ of the property. For example, some condos will be marketed as upscale, exclusive places—and the price range naturally blocks out most buyers. In this case, you’re paying for the right to be ‘one of the chosen few.’
But even the most upscale properties have payment schemes. Some developers may offer a a 0% downpayment scheme that let you pay in full in 48 months (that means hefty monthly payments). The minimum is usually 10%, with the balance payments stretched out over a few years. Remember, though, that there are usually discounts on cash payments, and if you want to make money from the unit, you can start renting it out long before you’re completely paid up. Although some condominium units in regular locations may depreciate with time and age, remember that units in prime locations still being developed have nowhere to go in value but up. That’s something to think about if you’re looking for property you can rent or sell in the future—hopefully, at a price many times more than your original investment.
If you have excellent credit you can also get a home loan, and have the leverage to shop around and find the one with the best rates.