Condominium Pre Sale

[Andrew Pettitt]

Investment Info:

Single-family residence buy & hold investment in Victoria.

Purchase price: $630,000
Cash invested: $60,000

2 Condo Units, 507 sq/ft, 1-bed, 1 bath

What made you interested in investing in this type of deal?

I was interested in scaling my real estate portfolio and looking for low cash investments.

How did you find this deal and how did you negotiate it?

I was researching real estate in high growth markets. I found a realtor that had listings for an entire condo building in pre-sales. The project required 15 units sold to start construction - They were sitting at 13. I leveraged this and showed interest in two units. This helped bring my per-unit price down and negotiate terms for payments.

How did you finance this deal?

I set my own dates and cash amounts for the deal - This allowed me to forecast my own finances and make payments at a comfortable rate until the build is completed. I used a line of credit to make the first payment and will either use a line of credit or cash to make the second payment during construction.

How did you add value to the deal?

I tipped pre-sales to 15 units sold so construction could start. I also added an assignment clause into the deal allowing me to sell the property without getting a mortgage on it. This gave the realtor potential for future commission within the next year and allowed me to negotiate harder on my purchase price.

What was the outcome?

The unit is currently in development. Once the build is completed, I'll have a final payment to finish the 20% down and attain a traditional mortgage. Or.. if the market has increased substantially, I can sell the unit without getting a mortgage for a quick flip and low investment.