Presale properties in Vancouver have been, and continue to be, a popular investment option. But while they can be the right option for many would-be investors, they should nonetheless be approached with caution.
We caught up with Realtor® Erik Carlson of Oakwyn Realty for tips to keep in mind when considering the presale market.
“From an investment standpoint, presale properties can be a great idea,” says Carlson. “You are buying at or near today’s market price, but not making mortgage payments until the project completes, which can be as many as three or four years away.”
In other words, once you put down a deposit, typically 15-20%, no further payments are due until the presale is ready for occupancy, and that means that the agreed upon purchase price of the unit remains fixed while the actual value of the property hopefully goes up.
“In a rising market, like the current market in Vancouver,” says Carlson, “presales can be a great investment vehicle because the value of the unit is likely going to increase before you make your first mortgage payment.”
The fact that presale properties are brand new is also a plus, he says, as a warranty will surround the property, typically resulting in more predictable, stable ownership costs and fewer surprise expenses in the first several years of ownership.
But Carlson is quick to point out that there’s a flipside to presale properties, as well.
“Presale contracts are usually weighted to the developer’s side,” he says. “Negotiations may be more difficult and require more creativity. If the development is popular, negotiations may not even be possible. Some developments sell out in a matter of days, even before an open house is held.”
You also need to be prepared to buy off a plan. An experienced Realtor® can help interpret the contract and the layouts you’re considering. In addition, a Realtor® with connections in the development community can often get you early access, while un-represented buyers usually have to wait for the open house. And by then, the best suites are often gone.
“What typically frustrates people is how many suites are sold when they arrive at the supposed ‘Grand Opening’” says Carlson. “This is because the developers hold previews for all sorts of connections, including Realtors’® clients, to view and buy before they open to the public.”
For more information about Erik Carlson, call 604-719-1501, or email. You can also visit Erik online or connect with him on Twitter and Facebook.
