Under-Construction vs Ready-to-Move: Risk, Return and Timing

Buying a home is a great decision which most people make at some point in their life. Also there is a question which buyers can’t seem to answer do we go for a property which is still under construction or a ready to move into home? Each option has its pros and cons and by which you can very much determine the success of your investment.

We at Property101 believes that what you choose depends on your financial goals, urgency, and risk tolerance. We take a look now at how the two options stack up in terms of cost, convenience, and long term returns.

The Price Advantage of Under-Construction Homes

In the growth stage developers of projects put forth lower prices as compared to fully finished properties in the same area. We see that they present pre-launch deals and early bird offers which in turn may be very beneficial for the buyer. Also we find that buyers may opt into payment plans tied in with the construction process thus reducing the at the moment large scale out of pocket expense.

However at lower prices there is a trade-off time and uncertainty. We see delays via regulatory issues, labor shortfalls, or funding problems as very common. Property101 suggests to go for developers which have a strong history and to check the project’s RERA registration in order to mitigate these issues.

The Certainty of Ready-to-Move Homes

Ready to move in homes is what buyers want. You see exactly what you’re getting, check out the quality of the build out, and move in as soon as the deal is done. No wait time and no construction issues, which is a great fit for people that need to be in their home right away.

On the other hand we see that ready homes go for a higher price than home which are still under construction and also the payment is required at once. Also it is true that buyers which value convenience and reliability above all else do see this as a worthwhile trade off.

Timing and Financial Planning

Timing is a key factor in which of these 2 choices. For those out first at home and are able to look at a 2 to 3 year horizon an under construction project may put you in the market at a lower price and also see growth by the time you take possession.

However if you are already a renter, a ready to move in home may be a better financial decision. You’ll save on rent which in turn may cover the higher price tag and also you begin to build equity right away. At Property101 we tell all our buyers to look at both options in terms of total cost over a 5 to 10 year period not just the out of pocket at purchase.

Customisation and Choice

Under development properties at times present an element of flexibility in terms of design which in turn allows buyers to put their personal touch on the space. Also developers may agree to see in small changes until after the structure is finished a benefit which does not apply to move in ready properties.

Yet at the same time this flexibility requires of you to exercise patience and trust in the developer’s vision. As for a ready home in comparison it is very transparent what you see is what you get.

Long-Term Investment Outlook

In terms of investment, what we see is that off market properties which are still in the construction phase do very well. By getting in at the start of a development area you put yourself in a position to profit as the infrastructure and amenities around the project grow.

Ready also at the drop of a hat are the ready to move homes which do very well for a steady stream of rental income or for the end user. For investors after that which is liquid and also predictable in terms of return they are a safe play.

Conclusion

Between new construction and turnkey options we aren’t to say which is best what it comes down to be what fits your present situation and risk tolerance. New home projects offer the chance at value and growth which of course does require some time. Turnkey in at homes give that immediate ease and security which may be worth the extra cost.

Property101 is of the idea that perfect property choice is one which aligns your financial goals with your lifestyle priorities. As you look to either long term growth or immediate ownership what you need to do is to research both sides of the issue which in turn will get you to put your money into a property as well as into peace of mind.