When you decide to purchase a home, there are two main ways to go about it. The first one is to buy a resale, and the second one is the purchase in pre-construction. While both options get you your dream home, there are positive and negative aspects to both. You would need to weigh them out to see which option best suits you. Purchasing a home is not a decision to take lightly, and you want to make sure you’re well-educated and informed.
When you purchase a pre-construction home, you are buying a property that has yet to be built. This means that you are the first owner of the property. Because of this, you can customize the property’s spaces and appliances during the construction process. This, of course, is subject to the condominium guidelines of building. From the start you can pick cabinetry, flooring and other amenities.
The main advantage of purchasing a pre-construction home is the price itself. This is usually due to the fact that the home doesn’t actually exist yet, and developers often start off with a lower price to make sure there is cashflow, rather than borrowing more money from the bank. This, in turn, has quite a large risk factor, which is development delays or even calling the project quits. However, the latter is less likely. As long as you are working with a reputable developer, you are in good hands.
Better Prices and Great Capital Gain
The great advantage of investing when there is a lower price is the property value going up even before the building is finished. If you’re just looking for an investment, by the time you are handed your keys, the property’s value will most likely be about 8 to 10% higher than what you paid, resulting in great capital gains if you wish to sell right away.
If you choose to invest in pre-construction, the downside is possibly not seeing the actual physical product until delivery. You are buying property based on a floor plan and renders. And while renders are often 100% accurate, it is not the same to see the unit in person. However, once showrooms are completed, you are able to appreciate in better fashion. Finishes, furniture and other things might differ, but developers will always add a disclaimer to let potential buyers know that this could be the case.
No Interests to Drive the Price Up
During the pre-construction phase, you are most likely to be able to make monthly payments and set up a payment plan. That is because the developer is not in a hurry to receive your money right away. This also means they don’t always charge interest on the unpaid portion of the purchase as long as you complete your payments on time.
All in all, purchasing pre-construction is a certain way to get the best price and benefit from your property as soon as you receive your key. However, many people are skeptical as to the completion of the project. That is why it’s important to work with companies that have experience developing and have always come through with their projects.
When you purchase a home on resale, you’re buying an already-built home who has had at least one previous owner. You are not buying from a developer directly, but rather an individual seller. Most sellers will give their home some upgrading maintenance previous to listing it. This allows potential buyers to see the home in top shape and to feel at ease about not having to spend an extra grand or more in fixing it up. Unless you’re going for a fixer-upper.
The main advantage of purchasing a property on resale is that you get to see the property up front. This means you can do inspections, check what things would need to be upgraded, changed and modified. You can walk into the unit and see the actual spaces and dimensions. If they are selling fully furnished, then you also get to see what state the furniture is in and if you want to change it or not. What you agree to is what you get, basically. Moreover, you know for certain that once you transfer the money and sign the papers you get the keys. Whereas with a pre-construction property, it could take months, sometimes even a year, to get physical possession of the property.
Older Homes Require More Maintenance
The biggest downside to purchasing a resale is the property’s age. You will not be the first owner, which means that renovations and upgrades are most likely needed. This requires a larger amount of spent money. When a property is in resale, there is often a bidding war, with many potential clients wanting to put down an offer on it. The better your offer, the higher your chances of outbidding other buyers. However, keep in mind that if the property is in a great location and offering a great price, many people will be wanting to own it.
Another thing to keep in mind is the paperwork. While purchasing in pre-construction requires you to present paperwork, it is quite different with a resale. The owner must provide proof that their paperwork is in order, all taxes are paid, the mortgage is either paid off or will be transferred to the new owner. There is a lot of inspection to be done, but if you are both working with trustworthy real estate agents, they will handle all the legalities of the transaction.
Pre-Construction vs. Resale
Neither one is better than the other. The reality is that it is up to the individual buyer whether they go for one or another. They are both great options, especially in Playa del Carmen or Tulum. However, pre-construction is a sure way to save money upfront. For foreigners investing in a Mexico home, pre-construction gives them the ease that everything will be in order, most certainly when working with a real estate agency. Either way, make sure you are aware of all the conditions before making an investment.
And remember, at Top Mexico Real Estate…we make it happen!