PRESALE INVESTMENTS

Are you an investor trying to decide if presales are worth the investment? In this blog we will discuss three major reasons you should consider when making this decision. The Surrey condo market is a sound investment given the exponential growth in the Central Surrey neighborhood. We have highlighted the proposed growth plan in previous blogs.

Low initial investment

Presales are an interesting market as the investment required is lower than purchasing a house. The reason being that since the property has not begun construction, developers need to raise funding which is why presales are generally priced better than after the building is constructed. Furthermore, the investment required can be as low as 5% depending on the developer’s requirements. Additional payments are phased out through the build out period allowing for cash flow planning.

Presales are a great investment for non-Canadian residents. In order for non-Canadian residents to purchase a current property in Vancouver, they must make a 35% down payment. When purchasing a presale in Vancouver, the deposit required is generally approximately 20% which may be paid over the course of 9-15 months. Presales are also an attractive option for investors due to the fact that the registration process occurs months in advance of construction. You, as a presale buyer, may be able to purchase by only having to put down 5-10% down as your deposit. Often times, the value of the property in question increases prior to the completion of construction.

Therefore, investors may see a strong ROI on their initial deposit. There is also the chance, that in a rising market, an investor may be able to buy in presale with a 5-10% down payment and then complete the purchase with over 20% in equity, without putting any more of their own money into the property. This is due to the fact that in a hot market, properties will have increased in value substantially from presale to completion. In addition to using the initial investment and earned equity to pay for their purchase, this scenario allows for investors to avoid costly CMHC high ratio insurance premiums. This high ratio insurance is normally required for all property purchased with under 20% down payment.

Easier to rent out + higher rent

Tenants generally prefer renting newer properties mainly because of the visual appeal and the cleanliness of a newer property. Furthermore, in current times, Air BnB has been a great rental income source and tends to generate higher monthly rent than a regular tenant. Since your property is newer, it will be easier to rent out as well. The location is great as many businesses are moving to the Central Surrey area and given the limited hotel availability close by, Air BnB would be a great option for those travelling for work to Surrey. Especially with new buildings having great amenities such as Gyms, Saunas, Hot Tubs, Concierge, Swimming Pools, etc. these are much likely to attract renters from anyone travelling into Surrey or simply looking for a place in that Area to rent.

Lower maintenance, higher peace of mind

Since this will be a new property, you are also entitled to the standard 2/5/10 Warranty in its entirety. This means, in most cases, you will have low maintenance cost and a very low hassle ownership experience though the lifetime of the warranty.

You will not have to invest in repairs and maintenance and can be assured that your tenants will have a fully functional place – another great selling point to potential tenants.

Contact Us!

If you have any questions regarding presales and the presale registration process, please feel free to contact us via email at info@thenewsurrey.ca