When investing in Mexico condos for sale, it’s important to consider whether you will be buying a resale condo or a new preconstruction unit. While the main disadvantage is that buyers will have to wait longer to use their Mexico property, there are many advantages to this kind of purchase which usually outweigh this point. The advantages of investing in preconstruction include:
Pricing – The key advantage of buying preconstruction is the pricing. Often new developments are competitively priced, and in the early stages the developer will even lower these prices making them very attractive for purchase. This is currently the case in one excellent new development of Playa del Carmen condos. Developers use this strategy to sell the first units quickly, offering the advantage to subsequent buyers that X many units have already been sold. This is a normal strategy and offers an advantage to buyers.
Flexibility – Buyers must also remember that although these are new sales from the developer, prices are not fixed; in some cases, buyers can make a reasonable offer. However, in cases where the preconstruction discount already makes for a very low price, lower offers may not be accepted, since there will be plenty of other buyers ready to take the discount price. Observing the market and consulting with an experienced agent will allow buyers to determine if it is a advantageous to make a lower offer.
Automatic Appreciation – As units are sold and the preconstruction discounts become less and eventually disappear, the value of your property has automatically appreciated in value; for example, if you bought a unit with a listed price of $250,000 for a preconstruction discount of $210,000, once the later units are being sold for the full $250,000, you already have an increase in value of $40,000 or almost 20%, and this is before any subsequent rise in market value.
Financing Options – Preconstruction payments typically start with a relatively low deposit (usually significantly lower than a mortgage downpayment, for example) and the remainder is paid according to construction progress. (Of course, no interest is charged on these amounts.) This means that while you enjoy the benefit of the lower price from locking in your purchase early, you’re not required to come up with the full payment immediately. In some cases at the point that the total is due the remainder can be transferred to long-term financing, either through the developer or through a bank, after the condominium regiment has been granted. This possibility should be discussed ahead of time. In any case, it’s almost like making a profit on money you haven’t spent …
Rental time vs. Preconstruction Savings Of course, as a condo investor, you are probably also considering income from rental income. Depending where your focus is, you may wish to research what rental rates are and compare this to your savings from the preconstruction discount. While some rental properties are sold furnished and ready to use, you may also need to consider whether it is currently the high season or not. Also, if you are buying in an area which is not the prime vacation rental area, you will need to compare your savings to the long-term rental rates. In most cases, the preconstruction savings are worth the time.
Overall, in normal market conditions buying with preconstruction discounts offers excellent savings, or, from an investment perspective, very good appreciation and potential for return.
Thomas Lloyd graduated from Purdue University Krannert School of Management with a degree in Management/Financial Option Investments. He has been living, investing, and working professionally in Mexico for over 15 years. In the summer of 2009, he received the first federally applied Mexico Real Estate Degree and Mexico Professional Real Estate License S.E.P. #5978657. He is the current president of TOPmexicorealestate, you can contact him at (512) 879-6546 or through the company’s web site www.TOPmexicorealestate.com NETWORK
“Mexico’s Leading Network of Specialists for Finding and Purchasing Mexican Properties Safely!â€
