Preselling vs. RFO Condos in the Philippines

Buying a condominium unit is a major life decision, especially in the Philippines where real estate prices are constantly rising. One of the first questions that homebuyers need to answer is whether to buy a preselling or ready-for-occupancy (RFO) unit.

Preselling condos are units that are still under construction or in the planning stage. Developers offer these units at a lower price than RFO units in order to attract buyers and generate funds for the project. Preselling condos also comes with flexible payment terms, making them more affordable for homebuyers.

RFO condos, on the other hand, are units that are already completed and ready for move-in. These units are typically more expensive than preselling condos, but they come with the advantage of being able to inspect the unit before buying and moving in immediately.

Preselling Condo Units: Planting Seeds for Future Dreams

Pros

• Lower Initial Cost: One of the most enticing aspects of preselling condo units is the relatively lower initial cost. Developers often offer attractive pre-selling prices and flexible payment terms, making it an appealing option for those looking to dip their toes into property investment without draining their savings.
• Potential for Appreciation: Investing in a preselling unit allows you to ride the wave of market appreciation. As the development progresses, the value of your property could increase, providing you with the potential for a handsome return on investment when you decide to sell or lease the unit.
• Customization Options: Being an early bird has its perks. With preselling condos, you often get the chance to customize certain aspects of your unit, from choosing finishes to floor plans. This level of personalization can result in a home that suits your taste and lifestyle perfectly.
• Time to Prepare Finances: The extended development timeline of preselling projects gives buyers ample time to prepare their finances. This can be particularly beneficial for first-time homebuyers or those with long-term financial goals, allowing them to save and plan accordingly.

Cons

• Uncertain Timelines: While having time to prepare your finances is an advantage, the uncertainty of project timelines can be a drawback. Delays due to unforeseen circumstances such as weather, construction issues, or permitting challenges can push your move-in date further into the future.
• Limited Visibility: Buying a preselling unit involves a certain level of faith in the developer’s vision. Without a finished product to tour, you rely on floor plans, artist’s impressions, and the reputation of the developer. This lack of visibility can be a source of anxiety for some buyers.
• Market Fluctuations: Real estate markets are dynamic and subject to fluctuations. While there’s potential for appreciation, economic downturns or unforeseen events can impact property values. Buyers should be prepared for the possibility that the market may not perform as expected.

RFO Condo Units: The Instant Gratification Route

Pros

• Immediate Occupancy: The most obvious advantage of ready-for-occupancy (RFO) units is that you can move in almost immediately after completing the purchase. This is ideal for those who are in a hurry to settle into their new homes or want to start generating rental income promptly.
• Tangible Product: With an RFO unit, what you see is what you get. There’s no need to rely on imagination or artists’ impressions; you can physically inspect the unit, ensuring it meets your expectations before making the purchase.
• Stable Market Conditions: Purchasing an RFO unit means you’re buying into the current market conditions. There’s no need to speculate on future trends or worry about potential delays affecting your investment. This stability can be reassuring, especially for risk-averse buyers.
• Immediate Rental Income: If your goal is to generate rental income, an RFO unit allows you to start earning right away. This can be particularly appealing for investors looking for a quick return on their real estate investment.

Cons

• Higher Initial Cost: The convenience of immediate occupancy comes at a price – RFO units typically have a higher upfront cost compared to preselling units. This may limit the options for buyers on a tighter budget.
• Limited Customization: Unlike preselling units, RFO condos come as-is. While some developers may allow minor modifications, significant customization options are often limited. If you have specific design preferences, you might need to compromise or invest in renovations post-purchase.
• Potential Depreciation: While preselling units have the potential for appreciation, the value of RFO units may not increase as significantly over time. This could impact the resale value if you decide to sell the property in the future.
• Limited Availability: Depending on the location and developer, the availability of RFO units might be limited. This can lead to a competitive market, with fewer options for buyers to choose from.

Which one should you buy?

So, which type of condo unit should you buy? Preselling or RFO? The answer depends on your individual needs and preferences.

If you are looking for an affordable condo unit with flexible payment terms, then a preselling condo may be a good option for you. However, you need to be prepared for the risk of construction delays and the possibility that the finished product may not be exactly what you expected.

If you are looking for a condo unit that you can move into immediately and that you can inspect before buying, then an RFO condo may be a better choice for you. However, you need to be prepared to pay a higher price and to have less flexibility in terms of customization options.

Additional Considerations

In addition to the pros and cons listed above, there are a few other factors that you should consider when deciding whether to buy a preselling or RFO condo unit in the Philippines.

• Developer’s reputation: It is important to research the developer’s reputation before buying a preselling or RFO condo unit. Make sure that the developer is reputable and has a good track record of completing projects on time and within budget.
• Location: The location of the condo unit is also an important consideration.

Regardless of your choice, thorough research, consultation with licensed real estate professionals, and a clear understanding of your goals will be your compass in navigating the exciting journey of real estate in the Philippines. Whether you’re planting seeds for the future or seeking instant gratification, the key is to make a decision that aligns with your vision of home and investment success. Happy condo hunting!