I would like to invest in a condominium for the purpose of deriving income from rentals. Would it be wiser to buy at pre-selling stage or would it be best to buy a finished unit?
It all depends on the availability of your funds and cash flow. Property Developers of pre-selling project developments offer flexible financing packages like zero down payment, or payable on installment while the project is under construction. The other advantage is, price offerings are definitely lower compared to finished units.
However, sound cash flow is important since you have a waiting period to consider before the unit is turned over to you. You must be prepared financially to continue paying for the monthly amortization.
Realize too that even at the point of turn over of the unit, finding a tenant won’t be as immediate as you expect, most especially if the real estate developer is constructing annexed towers or, have ongoing construction at the site that may be a cause of inconvenience. Tenants might not immediately be attracted to a new development if the entire project has not been completed, as they most definitely do not want to deal with the noise and other inconveniences during their lease contract.
On the other hand, if you have the funds to buy an “RFO” or ready for occupancy unit in a completely developed condominium community, you will be able to immediately open the unit for rent, and enjoy receiving the fruits of your investment. Also, a condo development with an established homeowner’s association can yield higher rental rates for you.