Purchasing pre-construction refers to securing a home or investment property before it is built. Whilst this can sound daunting, the right agent guiding you can help to answer any questions and be there with you every step of the way. Read through the blog below for insights into the main aspects to consider, and advice from our Residential Agent Marco Mastrogiovanni.

What are my benefits?

The major benefit of buying pre-construction is securing a price today, as the value of the property naturally increases during and after construction. Purchasing off-plan is sometimes perceived to be more nerve-wracking than securing an existing property. However, with the right due diligence, and the right agent supporting you, the pros far outweigh the cons.

Buying pre-construction also allows for financial planning, as projects typically take between 1-3 years to be completed. They require a 10-20% deposit and nothing further until completion, therefore allowing purchasers time to save and manage cash-flow between payments. Another key advantage to purchasing pre-construction is owning a brand-new property, which allows for personalization (when secured early and before the developers reach certain stages of the project). These personalisations can include choosing the tiles for the flooring or paint color for the walls.

Last but not least, pre-construction projects often allow for re-assignments, which in itself is an interesting investment model. See below for more details!

Understanding the big picture.

As we now recognize the benefits, it’s important to know what to look out for. Whilst every buyer has different goals and visions for an investment property or new home, we will work with you to explore the following:

• Site and floor plans
• Renderings 
• Actual site & location
• Interior options including decor
• The deposit and payment structure
• Anticipated groundbreaking & completion dates
• And most important – the vision and background of the developer.

In the best-case scenario, if the project has received planning approval from the Department of Planning, you will have peace of mind that the project will be built as per the plans. Comparing the offered square footage and layout with a similar, existing property you might be familiar with, can help you visualize the space and ensure it is the right decision for you!

How do I get started?

Work with an agent to find a pre-construction property that matches your requirements. If you’re unsure exactly what you’re looking for, the right agent will be able to present a variety of developments currently available or coming to market soon. Once you’ve found one you wish to purchase, it’s crucial you are:

• Comfortable with securing a property you can’t touch, feel, or see yet. This involves a certain degree of vision and patience, but comes with great rewards.
• Treating it as the project it is. You are planning for the future, and have something exciting to look forward to.
• Ensuring your bank and personal finances support you on your mission before you embark on this journey. We all know things can change, but nothing beats personal peace of mind. If you need help with introductions to local banks – I am here to help!

What happens if my personal circumstances change after I commit?

While pre-construction agreements and deposits are non-refundable, there is another option available for you; re-assignments!

Re-assignments is the process of a buyer selling the Agreement for Sale to Develop (the contract the buyer engaged in with the developers), before the project / development has been completed. In simple terms, the original buyer (Assignor) does not sell the property, they sell the contract to a new buyer (the Assignee).

Once the Assignor and Assignee agree on all the details, a Deed of Assignment will be drafted, which includes the payout of the original deposit paid from Assignee to Assignor.

Depending on the individual arrangement, the Assignor’s premium (the difference between the original purchase price and the new sales price) is either paid out at time of assignment, or at closing / completion of the development.

Needless to say, when securing a property prior to commencement of construction, it is highly likely there will be an uplift in property value, aka profit for you, when assigned during the construction.

To wrap up...

Pre-construction is a very exciting and unique sector of our real estate market. Having personally been highly involved in three major development projects so far, gives me a unique edge to provide personalized and informed service to individuals wanting to secure the perfect pre-construction opportunity.

We at IRG are keeping a close eye on the market, and often know of upcoming development projects before they reach the market. So, please reach out as we would love to be of service to you!

Marco@irg.ky | +1 (345) 917-5550