Tips about buying new apartments: 10. Do you want to buy an apartment in a development under construction? Advantages and disadvantages

Investment in a new apartment is one of the most important moments in the economic life of each and every one of us. Statistics say that we usually buy 1 – 3 dwellings during our life, so every mistake counts. During the last years (as there were not many new apartments ready) people used to buy the right to purchase an apartment in a future building. Today the situation is different and there is a significant stock of new apartments waiting buyers to choose. But there are also many other projects under construction. Which of the two options is better? It is vital for you to know their advantages and disadvantages, in order to save money and know what you invest in.

Apartments in projects under development: Advantages: Better price, maximum flexibility

An apartment in a future project used to be the top trend of the past, but today is not a preferableoption for investors. Still it has some strong advantages:

• It is cheaper! Usually the projects under development belong to developers who are blocked due to the crisis. This means that they have to sell for 1.000 different reasons and especially because their bank chases them. So, you will have a better deal.
• It gives you more flexibility. The developer can always come with ideas, proposals and solutions, in order to persuade you. These will solve most of your future problems, if you take advantage of them.
• It can be a good investment. With 20 – 30% discount comparing to the finished ones, an apartment in a project under development can become a good investment too.

"Better tie the donkey, instead of chasing him after"

• You follow up the construction. If you agree to pay on phases, this also means that you will be able to verify each phase and ask the developer to correct problems, before you pay him. Greeks say "better tie the donkey, instead of chasing him after". And in this case you will keep him tied for good.
• It can be exactly what you need. The apartment that you need, built as you need, in the price you can afford, with the future upscale potential all yours. (Provided that the developer is serious).
• All modifications done without extra cost (or smaller ones). Instead of receiving an apartment which has serious quality problems in its finishings and its interior architecture, you can solve them all in advance. Some of the modifications will be for free, some others will cost to you much less than they would in case you will correct them after the apartment will be finished.
• Usually the developer's bank offers loans with special terms. Or at least they used to. Check out the terms of the proposed loan and compare them with the other offers you have. You may discover that you can some money just because of this.

Warning: Never agree to buy an apartment in a future development if:

• You don't know the quality of work and the seriousness of the developer
• You don't see the structure of the project finished and the "dezmembrare" documents done.

Apartments in projects under development: Disadvantages: Uncertainty, potential problems if the developer will get blocked

An apartment in a future project may also hide significant dangers, in case you will not be careful and attentive. Its disadvantages are

• Potential problems with its legal status. Some guys didn't have money to finish the "dezmembrare" procedure, some others have already placed high mortgages, some more are simply into trouble. Be careful not to end up cursing them, searching for solutions which don't exist.
• Wait, wait and wait. You can not move in the apartment immediately. Sometimes you don't even know when exactly. It was proved that almost all the projects delayed their delivery date, either they were 100% presold or they got blocked by lack of financing. So, be careful not to wait too much…
• You get married to your developer's bank. No other bank can finance a project without all the papers to be finished. Only the bank which is the collaborator of your developer. Are they good? You are lucky. Are they bad? You are in trouble.
• Small (but significant) risk to lose your money. Several people paid advance payments and ended up blocked for years. Comparing to the thousands who have done the same procedure and now live in their new home, they represent a small %. But still they exist. So, this is why you should be very cautious and have at least the documents of "dezmembrare" done before you pay money in advance. Unless you know the developer very good and trust him.
• Two payments for one home you use (at the moment). You live in an apartment. You will have to pay for it a rent, or to sustain its monthly costs. Buying an apartment in a project under development means that you will pay for this as well, either a fixed advance payment, or monthly installments to a bank. (If you can avoid these double payments, it is even better for you, but not realistic I think…)
• Who will live around you? One day you will find out. You can definitely not control this, as most probably the developer has not sold all its apartments. So, hope for the best, but be ready for the worst too!
• The surrounding area may become your future (short or long term) nightmare. When the apartment will be delivered, you will have to deal with the surrounding area, which will not be ready at the same time. So, when counting the months, add some more (at least) for the surrounding area to be ready.
• Usually you will not have a clue about the future monthly costs (intretinere). And this is important for your future life.

On Monday, 03.05.2010

Tips for buying apartments in a development under construction.

How to save 5.000 – 15.000 euro