Get Real: New Construction as an Investment

Having spent the better part of my real estate career educating myself on the natures and intricacies of every real estate development…

… I have come to discover that my clients’ hard earned money is pretty safe when invested in a property.  However, investments in properties, most especially those in resale or land, are often long term investments that gain value with renovation, updates, and of course time.

Most recently, the Niagara Region has acknowledged a boom in out of town investors who see the area as one that facilitates retirement aspirations, easy access to our friendly border, picturesque waterfront views, and the fame of our wine region. Resale homes achieved unparalleled interest in the past year, and new construction subdivisions like Rolling Meadows and Oldfield Estates in Niagara Falls sold out in less than a week! More and more, Niagara is gaining the reputation as a versatile peninsula offering multiple options for a discerning buyer.

With this outside discovery in mind, perhaps it is time, as residents in this highly sought after area, to recognize the additional worth of where we have already chosen to live.  It is safe to say that Niagara will continue to grow and prosper as a place that attracts a lifestyle conducive to rest and relaxation, increasing industry, and resplendent neighborhoods within short proximity to Toronto.  On this same note, property values in the Niagara Region continue to climb after achieving a near 25% increase over the past year. If you are a numbers person, you will most likely compare this percentage to what you can achieve, or are achieving, in your current investments over the past year, noting an obvious discrepancy in return.

So why not consider investing in new construction in Niagara as an alternative way to see greater gains in shorter periods of time?  If you’re already putting two and two together, here’s why:

If you make the decision to invest in new construction in Niagara you will most likely only have to invest up to 10% to secure a lot, plan and contract to build.  Taking into consideration that building a home takes one to a year and a half to complete, your initial minimal investment will already benefit from a year’s worth of increased market value, not to mention continued interest in out of town buyers arriving with the foreknowledge of Go Train expansion into our area in the foreseeable future. Most importantly, many new homebuilders are offering the incentive of an assignment clause.  If you are not familiar with this contract terminology, optioning an assignment clause means that you are permitted to sell your new build home before incurring the closing costs– at a higher price.  So, essentially, you can make a profit on your new build without setting foot into it.  Your other option, once again, a pretty sound investment in itself, is to live in or rent the house for a limited time period at rising rental prices while your new build home, still with its Tarion warranty, increases in value through its infancy.

It is common to see our homes as investments, but new construction, especially in the Niagara region, is a dynamic way to achieve immediate gains amidst long and short-term expectations.  Most importantly, acquiring another piece of the Niagara Region puzzle is sure to grace your portfolio with the flash of lightning in a bottle that so many investments promise, but very seldom deliver.      

Ryan Serravalle is a Real Estate Broker and the Owner of Revel Realty.

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