Darwin of http://BuyFirstDeal.com posted a question on pre-construction condos. He already bought one and he has paid off half the mortgage. He asked me whether it makes sense to buy another one.
My short answer: NO - it does not make sense because you don’t get your money back quick enough to justify the risk. Don’t listen to the real estate agent selling you the deal because that’s conflict of interest. He/she is bound to make money when you buy and guess what he/she will recommend?
I don’t care even if Ayala is the developer of these pre-construction condos. I don’t care even if it’s in the best of locations. If it does not cashflow fast enough I am not interested. And I mean, I should make money on a property a few months, a few weeks, even a few days from now. In the case of pre-construction condos, it will take you a few years to even get any money on your investment and getting a return on investment? Forget it. Most of these so-called investments are not investments at all but you are just speculating at best. You are speculating if you are investing only for appreciation - that is you’re buying an investment simply for the capital gains.
If you make money only on appreciation, then DON’T buy the deal. You have to make real money, real quick even if the property does not appreciate at all.
So, how do you make real money (appreciation is “fake money” because appreciation is something you cannot spend right now - equity does not pay the bills), real fast in real estate? There are 4 different ways - to do it. I’ve written an entire book - “Think Rich Quick” about 3 of these ways. These are:
Please see the rest of the blog at: http://tracetrajano.blogspot.com/2009/10/whats-better-than-pre-construction.html