A recent survey reveals that overseas Filipino workers prefer to invest their hard-earned money in real estate out of all investment vehicles available. Despite the rapid urbanization of many parts of Mega Manila, the National Capital Region remains the most sought-after location.
In Metro Manila, one type of property is king: condominiums. While buying a ready-for-occupancy unit promises immediate ROI, the pre-selling kind is attractive in its own way.
A pre-selling condo in Capitol Commons, Bay City, BGC, or any other growth area in the metro can be bought for up to 50% less than the price of a finished unit. In addition to its tremendous potential for savings, being of the first buyers of a would-be constructed condominium complex comes with the privilege of reserving one of the best units.
The benefits of putting your money on a pre-selling property are obvious, but how safe of an investment is it? Like any other piece of real estate, it is not without risks. Below are the usual concerns regarding pre-selling condo units:
Length of Delay
It is not uncommon for a condominium project to take longer than expected to finish. If the developer misses the completion deadline, the turnover date will naturally be pushed back. Normally, a pre-sale contract gives the developer the leeway to have an extension of about a year to complete the construction without being subject to legal action.
Whether you are planning to re-sell the finished unit once it is ready for occupancy or rent it out to earn a steady source of income, delay in construction has a direct effect on your expected returns. In a country that normally gets inclement weather for several months, there is no telling how long the work will actually be postponed.
One danger of buying a property that has yet to be built in is the uncertainty of the look and quality of the finished product. Although a developer will provide a virtual model of your chosen condo unit, the property may not be what you have in mind upon turnover.
Even worse, the design may have changed without prior notice. This provision is usually part of the pre-sale contract, so you may have little recourse to dispute any last-minute modification in size, floor plan, and material choice, among others.
Another risk you have to take when buying a pre-selling property is the possibility that the developer may go bankrupt amid construction. If the project ultimately does not push through, you may find it hard to recover your deposit, which can be a big blow to your savings.
The same fate may await you if you deal with an unreliable real estate agent. A corrupt professional may rip you off and charge you a bunch of unnecessary fees. If the person you spoke with disappears on you, you may no longer refund the money you paid initially.
There is no avoiding these dangers, but choosing a trustworthy developer is the most effective way to mitigate all of the risks involved in buying a pre-selling condo. Take your time to exercise due diligence to pick the right property to buy to get your foot in the booming housing market of the Philippines.