Preselling vs. RFO Condo Units: Which Should You Choose?

condominium

When choosing a condominium unit, you can either get a preselling unit or a ready-for-occupancy (RFO) one. Not sure which one is the better investment? This article will tell you everything you need to know.

A condo unit is one of the best investments that you can make in the current Philippine property market. In fact, there were over 54,000 units sold in 2018 alone, an all-time high for the country’s residential property market. Needless to say, the current boom in the Philippine economy makes it an excellent time for people to invest in properties.

When you start looking around for condos, representatives will offer you one or the other: preselling or RFO. How do you know which one is the better investment? Here are the factors that you need to look into:

Preselling Units

Available preselling condos in Ortigas, for example, are properties that are marketed and sold before they are completed. These units are much cheaper than RFO units, and the money that these early investors pay will help fund the construction of the project.

Advantages

  • Low price and flexible payment options. Preselling units are sold at much lower rates than already existing ones, and developers often add discounts on top of that to attract more buyers. Moreover, you are given more payment schemes to choose from, which will make financing the property much more doable.
  • First choice. If you buy a property early in its development, you can enjoy the advantage of choosing a unit with the best location.
  • Fast ROI. For a condominium in a prime location, the value of your unit will have a relatively quick ROI. As for projects in provincial or less-developed areas, you have a certain level of risk to consider.

Disadvantages

  • Unexpected changes. You never know what can happen with a preselling project before it’s complete. It can be delayed, the construction may fall through, the turnover date may be delayed, etc.
  • Long waiting time. If you plan to live in the unit when it’s complete, you may be up for a long waiting time. Developers usually start selling properties as early as five years before the projected completion.

RFO Units

apartment building

These are completed and ready for an occupant to move in. Because there is already an existing entity, RFO units are usually more expensive than preselling ones.

Advantages

  • Complete and ready. If you want a unit that you can move into as soon as possible, an RFO unit may be the best choice for you.
  • No surprises. With an RFO unit, you don’t have to worry about unexpected changes. You are free to thoroughly inspect a property and base your decision on what you see, not on what the developer promises.

Disadvantages

  • Higher prices. RFO prices are usually 30 to 40% higher than preselling units, so you have to have good options for financing.
  • Limited choices. When choosing an RFO unit, you may not get the best location that you want.
  • Old building. If you move into an RFO unit, you will most likely miss out on the opportunity to enjoy brand-new amenities.

A condominium unit can be an extremely valuable investment. However, you need to weigh both choices equally and carefully before making a decision. So if you’re thinking of buying your first condo unit, consider the pros and cons of preselling versus RFO units.

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