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How To Buy A Pre-Construction Townhome

How To Buy A Pre-Construction Townhome

There are benefits of purchasing a pre-construction townhome. It’s an interesting way to be part of a project, like a totally new condo in a residential district, or have the initial claim on the penthouse in the most recent building.  Most times you also have the option of capitalizing on a couple of discounted early phase pricing.

Should I Purchase a Pre-Construction Townhome?

Is the real estate business right for me? This thought may cross your mind a few times. It is sometimes hard to reckon how a Townhome will look just staring at the blueprint. Not to worry, your developer will offer you a computer simulation model that is close to the real thing to aid your decision making. By implication, you won’t be purchasing blindly.

There are strings of benefits you gain when you buy a pre-construction home. The most appealing is the low price you can access when purchasing this property. Often, these pre-construction properties are sold in “buying phases”.  The value is increased after a particular amount of units have been sold. In certain instances, it could be after a 25 percent sale while for properties in high demand, the value may be raised after only 10 percent of the units have been sold

You may ask yourself, how do I buy an apartment that I have neither seen, touched nor even walked through?  Or how do I know what the views from a particular floor would be like?

Let’s guide you:

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1. Let the offering plan guide you

The offering plan is your de facto guide when purchasing. It contains all you need, from the selected appliances, opinions on taxes that tax lawyers have deemed as best after assessment of the completed building by the city. It will also have a “special risks” section, which will include things like whether or not the developer has the right to rent any unsold units.

Be informed that the developer is only bound by law to render the contents within the offering plan, not the content of the brochure or what’s in the offering.

2. Choose an experienced developer

Carefully study the track record and the reputation of the developer. A developer having a strong customer/client base means you will not be disappointed. The presence of issues or other forms of problems may require you to verify before you purchase.

Checking out discussion forums using Google about the developer is not a bad idea, any estate attorney with years of experience can also make recommendations,   on whom or who not to deal with.

Allowing your broker advice you is the best way of finding an experienced developer. Get the counsel of an informed broker on antecedent of the developer, level of past developments, resale history, information on his success in past construction and development.

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3. Make sure you secure Phase 1 pricing

Pre-construction apartments are sold in stages of pricing, buying in the first phase, helps you save 5 to 10 percent off the final listing price. However, the best units are sold last because prices are highest then.

4. Confirm the quality of the materials

Contained in the offering plan are the materials, you must be meticulous when inquiring about them. At times engineered floor is used to mask a light sheet of oak floor. In this way, you have engineered floors in place of the oak floor in contrast to what was originally assured in the offering plan. You will need to get precise details on the type of floor by asking the sponsor, for instance, the percentage of oak used on the floor.

Construction variations seem normal to sponsors and so they are allowed to make changes in everything, from materials to ceiling height contained in the offering plan. For this reason, it is advisable for your attorney to inquire about the standards for variations for the construction company and get details of the contract.

Though sponsors do not like people inspecting the apartment under construction but you should try to negotiate this. It will be less difficult to get them to allow you inspect the apartment if you are purchasing a signature apartment.

Importance of Purchasing Pre-Construction

You can get involved in real estate in numerous ways, however, pre-construction real estate happens to be the fastest growing with some of the quickest and highest returns.

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Pre-construction real estate should be given serious consideration because pre-construction condominiums have the best pre-construction real estate on the market presently. They are found everywhere, but some locations are going through a preconstruction real estate increase because of increased demand for accommodation in these areas.

Lower starting prices are the primary reason why investing pre-construction estate is a sure bet. Buying at the commencement of a sales launch is the best because the builder presents the lowest prices at this time. This is the best time to make appreciable returns on investment.

When you buy early, you purchase a home with better future value at the current price; you also have freedom to choose from different options. There is a wide selection of floor plans to choose from, so you can make changes to your own unit. This makes your home unique because it stands out of the crowd.

Because people demand condos in hot locations, you won’t wait long to see a return on your investment compared to if you bought a home or property before construction, which yields faster returns. Selling or renting a never lived in condominium or home is much easier to sell than an older one.

The opportunity of instant equity provides the best perk of investing into pre-construction real estate. Meaning you don’t wait for investment return to come up in years, it does so right away as soon as you sign the agreement of purchase & sale.

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Numerous incentives come with a pre-construction real estate investment market. Developers offer extras because they want to retain investors or woo investors initially. These benefits often increase the worth of the real estate that you are looking to invest in immensely. Examples of these benefits include upgrades, appliances, furnish or direct credits off the purchase price. Every benefit increases the worth of the property.

After making a purchase and investing now comes the waiting game. It will take years to close out, moreover construction setbacks is fairly common. The condo’s worth will still, appreciate at a higher than average rate, giving you a handsome income on your 15-20% down payment.

Presently, preconstruction condos are the in-thing in the real estate market. If you have been thinking of investing in a pre-construction condo or home, then feel free to contact us. We provide free research to help you make that decision, define your investment goals and bring you to the pre-construction project of you dream.

Featured photo credit: Pre-construction Home via pre-constructionhomes.com

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Last Updated on August 20, 2019

How to Set Financial Goals and Actually Meet Them

How to Set Financial Goals and Actually Meet Them

Finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. And that’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

In this article, we will explore ways on how to set financial goals and then actually meet them with ease.

5 Steps to Set Financial Goals

Though setting financial goals might seem to be a daunting task but if one has the will and clarity of thought, it is rather easy. Try using these steps:

1. Be Clear About the Objectives

Any goal (let alone financial) without a clear objective is nothing more than a pipe dream. And this couldn’t be more true for financial matters.

It is often said that savings is nothing but deferred consumption. Therefore if you are saving today, then you should be crystal clear about what it is for. It could be anything like kid’s education, retirement, marriage, that dream vacation, fancy car etc.

Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives, however small they may be, that you foresee in the future and put a value to it.

2. Keep Them Realistic

It’s good to be an optimistic person but being a pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going out of the line will definitely hurt your chances of achieving them.

It’s important that you keep your goals realistic in nature for it will help you stay the course and keep you motivated throughout the journey.

3. Account for Inflation

Ronald Reagan once said – “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman”. And this quote sums up the best what inflation could do your financial goals.

Therefore account for inflation whenever you are putting a monetary value to a financial objective that is far away in the future.

For example, if one of your financial goal is your son’s college education, which is 15 years hence, then inflation would increase the monetary burden by more than 50% if inflation is mere 3%. So always account for inflation.

4. Short Term vs Long Term

Just like every calorie is not the same, the approach towards achieving every financial goal will not be the same. It is important to bifurcate goals in short term and long term.

As a rule of thumb, any financial goal, which is due in next 3 years should be termed as short term goal. Any longer duration goals are to be classified as long term goals. This bifurcation of goals into short term vs long term will help in choosing the right investment instrument to achieve them.

More on this later when we talk about how to achieve financial goals.

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5. To Each to His Own

The journey of setting financial goals is an individualistic affair i.e. your goals are your own goals and are determined by your want to achieve them. A lot of times we get on the bandwagon of goal setting only to realize later on that it was not meant for us.

It is important that your goals are actually your goals and not inspired by someone else. Take a hard look at this step at all the goals you’ve set for after this step, you will be on the way to achieve them.

By now, you would be ready with your financial goals, now it’s time to go all out and achieve them.

11 Ways to Achieve Your Financial Goals

Whenever we talk about chasing any financial goal, it is usually a 2 step process –

  • Ensuring healthy savings
  • Making smart investments

You will need to save enough; and invest those savings wisely so that they grow over a period of time to help you achieve goals. So let’s get down to ensuring healthy savings.

Ensuring Healthy Savings

Self realization is the best form of realisation and unless you decide what your current financial position is, you aren’t heading anywhere.

This is the focal point from where you start your journey of achieving financial goals.

1. Track Expenses

The first and the foremost thing to be done is to track your monthly expenses. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you would be surprised to see how small expenses add up to a sizeable amount.

Also categorize those expenses into different bucket so that you know which bucket is eating the most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pump up your savings rate.

2. Pay Yourself First

Generally, savings come after all the expenses have been taken care of. This is a classical mistake which almost everyone of us do. We pay ourselves last!

Ideally, this should be planned upside down. We should be paying ourselves first and then to the world i.e. we should be taking out the planned saving amount first and then manage all the expenses from the rest.

The best way to actually implement is to put the savings on automatic mode i.e. money flowing automatically into different financial instruments (for example – mutual funds, retirement corpus etc) every month.

Taking the automatic route will make us lose control of our money and hence will compel us to manage in what’s left with us thereby increasing the savings rate.

3. Make a Plan and Vow to Stick with It

Budgeting is the best to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be made.

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Nowadays, several money management apps and wallets can help you do this automatically. It’s easy and who knows, you may just end up doing what people fail to do.

At first, you may not be able to stick to your plans completely but don’t let that become a reason why you stop budgeting entirely.

Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

4. Rise Again Even If You Fall

Let’s be realistic. It’s not like the world will come to an end if you made one mistake. This isn’t called leniency but discipline.

If you fail to meet your budget for a month, don’t give up the entire effort just like that. Instead, start again.

Remember that flexible plans are the most realistic plans. So go forward and try to follow your financial goals as planned but if for some reason, the plan gets out of hand for you, do not give up on it just yet. This has a lot to do with your psychology rather than any material commitment.

All you have to do is to stay on the road and vow to stay on it, no matter how much you fall down.

5. Make Savings a Habit and Not a Goal

In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

Make Savings a habit rather than a goal. While it might seem to be counter intuitive to many but there are some deft ways of doing it. For example:

Always eat out (if at all) during weekdays rather than weekends. Usually weekends are expensive. Make it a habit and you would in turn be saving a great deal.

If you are travelling buff, try to travel during off season. Your outlay will be much less.

If you go out for shopping, always look out for coupons and see where can you get the best deal.

So the key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice which will be harder to sustain over a period of time.

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6. Talk About It

Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission. And it would be rather easy to lose the grip over your discipline.

Therefore in order to stay the course, it is advisable that you keep yourself surrounded with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

7. Maintain a Journal

For some people, writing helps a great deal in making sure that they achieve what they plan.

So if you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

Use this journal to write down all essential points such as your short term, mid term and long term goals, your current sources of income, your regular expenses which you are aware of and any committed expenses which are of recurring nature.

When you have a written commitment on paper, you are going to feel more energised to follow the plan and stick to it. Moreover, it is going to be a lot more easier for you to follow you and track your progress.

At this point, you should be ready with your financial goals and would be doing brilliantly with savings; now it’s time to talk about the big daddy – Investments.

Making Smart Investments

Savings by themselves don’t take anyone too far. However savings when invested wisely can do wonders and we are at that stage where we will talk about making smart investments.

8. Consult a Financial Advisor

Investments doesn’t come naturally to most of us therefore rather than dabbling with it ourselves, it is wise to consult a financial advisor.

Talk to him/her about your financial goals and savings and then seek advice for the best investment instruments to achieve your goals.

9. Choose Your Investment Instrument Wisely

Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about them.

Just like “no one is born a criminal”, no investment instrument is bad or good. It is the application of that instrument that makes all the difference.

Do you remember we talked about bifurcating financial goals in short term and long term?

It is here where that classification will help.

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So as a general rule, for all your short term financial goals, choose an investment instrument that has debt nature for example fixed deposits, debt mutual funds etc. The reason for going for debt instruments is that chances of capital loss is less as compared to equity instruments.

10. Compounding Is the Eighth Wonder

Einstein once remarked about compounding,

Compound Interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.

So make friends with this wonder kid. And sooner you become friends with it, quicker you will reach closer to your financial goals.

Start investing early so that time is on your side to help you bear the fruits of compounding.

11. Measure, Measure, Measure

All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments; taking stock of how our investments are doing.

If there is one single step where everything (so far) can go wrong, it is at this step – Measuring the Progress.

If we don’t measure the progress timely, then we would be shooting in the dark. We wouldn’t know if our saving rate is appropriate or not; whether financial advisor is doing a decent job; whether we are moving closer to our target or not.

Do measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!

The Bottom Line

This completes the list of tips for you to set financial goals and actually achieve them with not so great difficulty.

As you can see, all it requires is discipline. But guess that’s the most difficult part!

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Featured photo credit: rawpixel via unsplash.com

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