“Pre-Sale & Flip” Real Estate Investment – investing in pre-sale or pre-construction real estate – was proven to be profitable. You can always buy real estate at a fraction of the cost of a completed property. In Bangkok and some other area in Thailand, real estate will appreciate in value (increase price) before the project is actually complete. For this reason this kind of investment is so good for property investors and especially for foreigners, that don’t even need to bother with real estate ownership paperwork. And certainly, pre-sale real estate may help you to get a deal on condo or house that you would like live in future. In the booming real estate market in Thailand some audacious speculators make more bucks assigning (flipping) a pre-sale contract than developers that create the condominium.
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It may look easy. Place a down payment on a condo to be constructed, or, if you are adventurous enough, buy few of them. By the time the project was finished, climbing property prices enabled you multiply your down-payment. If you choose to assign the contract (to flip) you made the cash profit, without even having to move in.
Even if you are a genuine apartment buyer wanting a new place to live, there are many reasons to consider pre-sale. You buy today and have two or even three years to move in. During this period you have time to sell your current condo. In addition you have a luxury of picking colors and finishing for your new property. And, in the bottom line, if real estate market soars during construction time, you benefit from price increase too.
Is it as easy?
Understand why developers sell pre-construction real estate
Always when you buy whatsoever, it is a good idea to understand why it is for sale. Why developer sells earlier if the profits are higher after construction?
The reasons may be quite straightforward and obvious, still you want to make sure the developer isn’t disguise any fact about the building they discovered after breaking ground:
- Developers often need funds to complete specific project on time. Selling pre-construction real estate provides them fast cash without getting into a credit or accruing interest on a loan.
- Sometimes developers need to have outside investors like you to get approved for a loan.
The main property you buy is the developer’s reputation. Ask for references from investors and buyers in previous condominium projects. Learn builder’s rating for after-sales and maintenance service. Understand is and how solid is the developer. Learn what recourse do you have if the developer does not complete the project. Advise with professional real estate brokerage agencies in project neighborhood.
One simple still useful advice – get invited to pre-sale launches and learn the latest trends, prices, features, or … at least get free beer and finger food.
Understand today’s housing market
If you are interested in”Pre-Sale & Flip” Real Estate Investment in Thailand in an specific neighborhood, this may be not as inexpensive as you thought. Why? Because investors and ‘flippers’ who have been doing this to gain profits for decades monitor Thailand housing market for the most profitable pre-sale projects. For smarter of us, competition from knowledgeable and experienced investors indicates that the project is worthwhile.
If we talk about Thailand and Bangkok specifically, we know from CBRE Research’s Bangkok Real Estate Market Outlook 2017 that the price of prime Central Business District (CBD) land in Bangkok supposes to continue to grow as downtown condominium demand continues to remain strong with prices projected to increase further over 2017. CBRE Research is confident that the land price record will be broken again in each CBD location.
CBRE believes that demand for high-end and above condominium projects will remain strong over 2017 although buyers will become more selective. Demand will continue to be driven largely by Thai buyers, accounting for 85% of the buyers.
By nature, “Pre-Sale & Flip” real estate investment requires you to relay on some guesstimate about the property market value in future, i.e. after completion. And we need to accept that we can’t foresee calamity like a real estate market crash, which may simply cause loss of your investment. The only choice you have is between signing a contract (i.e. losing a pre-payment in case builder has to pull the plug) and walking away. Whatever we think and say, we need to realize that “Pre-Sale & Flip” real estate investment is risky investment.
Be aware that there is always a probability that a pre-sale project will not follow through to completion or finish development. This may happen if developer cannot secure financing for project construction. If this occurs, investors will receive their returned escrowed deposits or offered incentives and deep discounts to fill empty spots in other projects. Before making investment decision it is best to ensure that this specific project is well funded and meets your requirements.
Look only for projects with reputable developers and evaluate their projects that have already been built to determine quality.