Finding great deals in the pre-construction market is easy - many developers will even bus you in from out of state to show you the latest hot property and attract your investment. The hard part, once you've signed on, is finding the next buyer. For a pre-construction investment to work, someone has to want to live in the property once it's finished. As the initial buyer it's part of your job to find that market.
This second wave of buyers, also known as follow-on buyers, can often be divided into several categories: local; investor; second home buyer; and retirement buyer. Since pre-construction projects are almost always condos, these buyers are a little easier to target, but to understand them it's important to look at each group individually.
Local buyers typically find your condo in the newspaper, or from area real estate agents. They are usually looking for a year-round home, and are typically selling or planning on selling their other one.
Investors are always looking for an opportunity to grow their money, and commonly find pre-construction deals online, through investment groups, or through brokers. These buyers are well-networked, and can often put you in touch with a larger community of buyers.
Second home buyers can be local residents, or they might come from out of state or another country to purchase your condo. They typically look for new homes in magazines, mail-out brochures, home shows, or while traveling through your area.
Retirement buyers are most often similar to second home buyers, but are more likely to be networked to other retirement buyers, and can help bring in multiple sales.
It's important to know the developer's marketing plan when you look at a pre-construction deal, to gauge whether each group is targeted effectively. If you can think like the second wave buyer when buying and marketing your pre-construction property, you'll be more likely to close the deal with a solid return on your investment.
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