How to buy real estate without qualifying and unravelling the Appeal of Presale Properties in Vancouver
What Exactly is a Presale?
A presale refers to acquiring a property even before its construction commences.
Is a Mortgage Essential for a Presale?
Not necessarily. Yet, it’s always good to know where you stand financially.
One tactic gaining traction is purchasing a long-completion presale without any intention of completion and instead opting for an assignment sale.
Decoding Assignment Sale:
Imagine selling your promise rather than the actual property. It means you contracted to buy a property, and later, you pass on that contract to another buyer without seeing it through to completion.
When venturing into presales, ensure your contract has a friendly assignment clause. Collaborating with a realtor experienced in presales can be immensely beneficial.
By not involving a realtor in your presale purchase, you might be missing out. Some realtors have exclusive access to developer’s VIP perks:
- Priority in unit selection.
- Exclusive incentives and cash-back offers.
- Lower assignment fees.
Assignment fees can vary, from a fixed rate (like $1,000) to a percentage of the assigned sale price or even a portion of any profit generated from the assignment sale.
Historically, Greater Vancouver‘s property values have doubled approximately every 10 years. With this trend, it’s statistically likely that a 6-year presale will appreciate considerably.
Buy a one-bedroom presale condo in Vancouver for $1,000,000 with a 6-year completion. Based on past trends, that condo might appreciate by $500,000 to $600,000 by its completion date. Even on the conservative side, you’re looking at a potential $250,000 appreciation for just a few hours of commitment.
High budget? Explore affordable options outside Vancouver’s core.
However, I must emphasize: Always research thoroughly before venturing into presale real estate. There are risks, especially if you don’t secure a mortgage approval right away. While such an approval might not hold much weight for a property completing in half a decade, it does provide a sense of your current financial standing.
Pros of Presale:
The deposit structure can be advantageous. Instead of an immediate 20% deposit, you might spread it over several years. Some deals might even offer a total deposit of 10%, split over two payments!
What About the Risks?
The real estate market is volatile. Prices might fall, leaving you to bridge the gap. If a developer defaults, your investment becomes a missed opportunity, even if you get a refund. And if you can’t secure a mortgage upon completion? Private lending could be a temporary solution.
To delve deeper into presale real estate, feel free to reach out. My bestselling book, Rockstar Real Estate Investing, offers more insights into smart property investment.
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Signing off, I’m Jessi Johnson, reminding you to steer your life wisely and make informed property choices!