Buying a condominium unit is one of the best ways you can benefit from the booming real estate industry right now.
As schools and businesses resume onsite work, the demand for pre-selling condo units and ready-for-occupancy (RFO) developments also grows. As a real estate investor, you have a good chance of gaining great returns on investment (ROI) if you finally buy a condominium property this year.
However, it’s easy to fall into the trap of a bad investment when you don’t do the homework for your real estate purchase. So whether you’re a first-time buyer or a seasoned investor, you have to ask yourself this crucial question: what type of unit should I purchase, an RFO or a pre-selling property?
It’s time for you to find out the pros and cons of these two property options for your ideal DMCI Homes investment. Learn more about them by checking out this real estate investment guide.
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What is a pre-selling condo going to do for you, versus an RFO condominium? How might an RFO unit impact your savings in comparison with a pre-selling unit? Keep on reading to discover the pros and cons of the pre-selling versus RFO condominiums.
Pre-Selling Condo Pros and Cons
Pro: Higher return on investment
One of the main reasons why you should invest in a pre-selling condo is that they offer a fantastic return on investment (ROI) for every intrepid property investor. Whether you’re new to property investments or a veteran in the real estate game, buying a pre-selling unit makes more sense in the long term than buying a counterpart RFO.
The reason why it makes more sense to go for a pre-selling property is that the market value of your condominium unit will increase over time. In the few years between pre-selling and construction completion, your property’s market value will grow, meaning that you’ll reap the reward of a higher ROI when you lease or market your property.
Once you take ownership of this valuable real estate asset, you might be wondering how to sell a pre-selling condo next. So always make sure to work with a reliable real estate developer like DMCI Homes to get timely and professional answers to your real estate investment questions.
Pro: Lower buying prices
If you aren’t on the lookout for a property to market or lease, then you might be wondering how to buy a pre-selling condo for your own needs instead. If that’s the case, then you’re in luck – because pre-selling developments often have lower buying prices, in comparison to their RFO counterparts.
Why is this the case? It’s because you’re purchasing a part of the condominium property before it’s even fully built. Developers are often generous with their discounts at this phase of construction. This means that you can benefit from prices that might be 30% lower than the average buying price of an RFO unit.
If you’re capable of paying in full for your condominium unit, then you might even enjoy a 10% to 15% discount upon purchase. As long as you’re working with an excellent DMCI Homes team, you can be assured of an exquisite property upon the completion of the condominium development.
Con: Longer construction time
There are a couple of cons to this pre-selling option for property investment, however. If you look back at the previous pro, what a pre-selling condo means is that your property is still under lots of construction. That means you might have to wait three to five years before you can use, lease or market your property investment.
If you’re planning to live in your condominium unit, then the longer construction time will pose a problem for your long-term life plans. However, if you’re treating your condo unit as an investment instead, then you’ll definitely benefit from the long construction period due to a higher ROI over time.
Con: Higher risk of turnover delays
Another reason why purchasing a pre-selling property might not work for you is that there’s a bigger risk of turnover delays, given a couple of crucial years between property purchase and construction completion.
Again, what does “pre-selling” condo mean? It means that your real estate property isn’t totally built yet. Unexpected risks like natural disasters, economic crashes, and developer bankruptcy can plague the construction timeline of development, leading to expensive losses for you, the potential buyer.
However, there is an investment-saving hack that you can follow to ensure a secure purchase every time. To avoid the risks of turnover delays, always make sure to work with a reputable real estate developer, with an excellent track record of delivering property development projects on time.
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Pros and Cons of Investing in an RFO condo
Pro: Lower risk of turnover delays
One of the best reasons why you might want to go for RFO real estate over pre-selling real estate is that you can utilize your unit right away, no questions asked. Everything will be there for you to use; as soon as you’ve settled all your paperwork, requirements, and payments, your RFO unit will be turned over to you all at once.
In addition to the immediate utilization, you can also preview the property to set your expectations prior to your scheduled turnover.
What you see is what you get. You’ll be able to view the condominium interior design and amenities because they’re already available and fully constructed. You won’t experience the disappointment of turnover delays with an RFO property purchase.
Pro: Start your condo life right away
If you’re planning to actually live in your condominium unit, then here’s another RFO pro for you: immediate move-in.
An RFO unit is the perfect choice for starting families and working professionals who have no time to wait when starting their condominium life. By buying an RFO property instead of a pre-selling one, you’ll have the opportunity to pursue your lifelong condo-dwelling dreams with no risk of construction delay.
As mentioned before, you’ll also have the opportunity to get a feel of the condominium before you commit to this long-term property investment. With a healthy condo design, you’ll immediately reap the benefits of the condo-dweller lifestyle when you go for an RFO instead of a pre-selling unit.
Con: Higher buying prices
Of course, there are still a couple of cons to choosing an RFO over its pre-selling counterpart. One major downside is that most RFO developments start with higher buying prices, compared to other real estate developments that are still under construction.
The reason why an RFO unit is more expensive than a pre-selling unit is that the market value of RFO developments grows over time. With an RFO, you’re technically buying a unit at the end of its construction period. Therefore, its market value grew way higher over time, compared to where it was when the development was first being constructed.
Since RFO properties are more expensive than their pre-selling counterparts, they might be ideal for individuals with a more stable financial situation. So make sure that you’re being responsible for those 13th-month pay investments before making a big choice like buying an RFO unit.
Con: Shorter payment periods
In addition to higher buying prices, RFO developments also have shorter payment periods, often requiring full payments all at once. This is because you can utilize your property right away, no questions asked. So while that can be a pro for some real estate buyers, others might not be able to afford an RFO payment within such an inflexible payment period.
However, if you’re financially stable enough to buy an RFO within the agreed-upon payment period, then you should still go for that DMCI Homes condo purchase. An RFO unit is a great choice for families and working individuals, letting you get a head start on your new condominium lifestyle right away.
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Comparison Table: Pre-Selling and RFO
So before you go off on your real estate investment journey, always make sure to weigh the pros and cons of your property purchase choices. Here’s a final breakdown of the pros and cons between pre-selling and RFO properties:
| PRE-SELLING | RFO | |
|---|---|---|
| Buying price | ✅ Lower buying price | ❌ Higher, stricter buying price |
| Turnover risks | ❌ Higher risk of turnover delay | ✅ Minimal turnover delay risk |
| Waiting time | ❌ Longer wait for construction | ✅ No wait time before move-in |
| Return on investment (ROI) | ✅ Higher ROI from date of purchase | ❌ Lower ROI from date of purchase |
Always study your investment options so that you can ensure safe and secure decisions for your condo-dweller lifestyle today.
Photo courtesy of Max Vakhtbovych via Pexels
The best property purchases are the ones that fit your unique needs as a real estate investor. Hopefully, this quick breakdown of RFO vs pre-selling condos gave you more confidence in your investment goals this year.
So make sure to avail yourself of expert advice when it comes to all your real estate investment goals. Visit DMCI Homes to discover the property development of your dreams today.
