{"id":102534,"date":"2024-12-19T10:59:49","date_gmt":"2024-12-19T02:59:49","guid":{"rendered":"https:\/\/iqiglobal.com\/blog\/?p=102534"},"modified":"2026-01-09T15:59:02","modified_gmt":"2026-01-09T07:59:02","slug":"mistakes-when-investing-in-new-construction-home","status":"publish","type":"post","link":"https:\/\/iqiglobal.com\/blog\/mistakes-when-investing-in-new-construction-home\/","title":{"rendered":"5 Mistakes to Avoid When Investing in New-Construction Home\u00a0"},"content":{"rendered":"\n

You have been wanting to own a home<\/mark><\/a> for some time. Now, you hear that a new property area is being developed in the locat<\/mark><\/a>ion<\/mark><\/a> you’ve always dreamed of. <\/p>\n\n\n\n

It’s near your workplace<\/strong>, with charming cafes nearby<\/strong> and easy access to shopping centers<\/strong> and public transport<\/strong>. <\/p>\n\n\n\n

However, there is a challenge: the houses are still being built<\/strong> and are only in the early stages. Heavy construction is ongoing<\/strong>, and the completion date is unclear<\/strong>. <\/p>\n\n\n\n

This leads to a dilemma: “Should I go ahead and put down a deposit on this new property, even though I’m unsure of what it will eventually look like? Should I take a leap of faith and invest despite the uncertainty?” <\/p>\n\n\n\n

Understand that investing in under-construction homes can offer both attractive opportunities and significant risks, as they come with uncertainties<\/strong> that need to be carefully considered<\/mark><\/a>.<\/a> <\/p>\n\n\n\n

Here’s what you should know<\/mark><\/a> before investing in a home that is still under construction. <\/p>\n\n\n

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Pros & Cons: Investing in Under-Construction Property<\/h2>
The Good Side <\/a>
1. Lower Purchase Price <\/a><\/li>
2. Customization Potential <\/a><\/li>
3. Higher Returns <\/a><\/li>
4. Less Competition <\/a><\/li>
5. Improved Market Value Post-Completion <\/a><\/li><\/ul><\/li>
The Bad Side <\/a>
1. Higher Risk of Abandonment <\/a><\/li>
2. Uncertainty Around Completion Timeline <\/a><\/li>
3. Quality and Safety Concerns <\/a><\/li>
4. Legal and Compliance Risks <\/a><\/li>
5. Market Risks and Uncertain Resale Value <\/a><\/li><\/ul><\/li>
Mistakes To Avoid <\/a>
1. Neglecting Inspection <\/a><\/li>
2. Underestimating Completion Costs <\/a><\/li>
3. Not Verifying Legal and Compliance Status <\/a><\/li>
4. Ignoring Market Conditions <\/a><\/li>
5. Fail to Plan Ahead <\/a><\/li><\/ul><\/li><\/ul><\/div>\n\n\n\n
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The Good Side<\/strong> <\/h2>\n\n\n\n
1. Lower Purchase Price<\/strong> <\/h3>\n\n\n\n
Investing in an under-construction home or semi-complete home can be particularly appealing due to the possibility of a lower purchase price<\/strong>. <\/p>\n\n\n\n
Since the property isn’t fully finished, developers or sellers might provide substantial discounts<\/strong>, allowing buyers to secure real estate<\/mark><\/a> for much less than a fully completed home. <\/p>\n\n\n\n
For under-con properties, you usually just need to cover the booking fee<\/strong>, which can range from around RM 1,000 to RM 15,000<\/strong>. (Of course, this can change based on market trends each year.) <\/p>\n\n\n\n
Those looking to enhance their return on investment (ROI), this presents a great opportunity, as the lower upfront cost<\/mark><\/a> can result in greater profit margins<\/strong> when the home is eventually completed and either sold or rented out. <\/p>\n\n\n\n
2. Customization Potential <\/strong> <\/h3>\n\n\n\n
When buying an under-construction home, buyers usually have a say<\/strong> in the final design and finishes. <\/p>\n\n\n\n
This includes selecting flooring materials, paint colours, kitchen and bathroom fixtures, or even altering the layout to meet specific needs! <\/p>\n\n\n\n
For homeowners, it’s a great opportunity<\/strong> to shape a property that matches their style without having to build from the ground up, especially if the existing structure is already close to what they envision. <\/p>\n\n\n
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3. Higher Returns<\/strong> <\/h3>\n\n\n\n
Investing in a property that’s still being built can often lead to better returns<\/strong> because there’s a longer gap between when you buy it and when it’s ready. <\/p>\n\n\n\n
If you decide to sell once you get the Occupation Certificate<\/strong>, you could see a nice increase in the value of your investment. <\/p>\n\n\n\n
4. Less Competition<\/strong> <\/h3>\n\n\n\n
There may be less competition<\/strong> for semi-completed homes or homes that are still under construction, compared to fully finished properties, as many home seekers are wary of purchasing homes<\/strong> that aren’t finished, fearing hidden issues<\/strong> or prolonged timelines<\/strong>. <\/p>\n\n\n\n
This lower demand can give investors a stronger position to negotiate<\/strong>, helping them snag better deals! <\/p>\n\n\n\n
5. Improved Market Value Post-Completion<\/strong> <\/h3>\n\n\n\n
This is a big plus for anyone looking to get into the rental business! <\/p>\n\n\n\n
When the house is finally completed, its market value can really shoot up, especially if it’s in a growing neighbourhood. <\/p>\n\n\n\n
You can boost its value with updates and changes<\/strong> that align with what buyers want today. Often, the increase in value from completing a home can be greater than the original investment. <\/p>\n\n\n
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The Bad Side<\/strong> <\/h2>\n\n\n\n
1. Higher Risk of Abandonment <\/strong> <\/h3>\n\n\n\n
Investing in a project that is still under construction carries some level of risk. <\/p>\n\n\n\n
There have been instances where builders failed to meet deadlines<\/strong> or worse, completely abandoned the property<\/strong> project. <\/p>\n\n\n\n
This can happen for a variety of reasons, including financial difficulties<\/strong>, rising costs of construction materials, and increased interest rates. <\/p>\n\n\n\n
Therefore, it’s imperative to do detailed research<\/strong> on the builder’s background before making any investmen<\/mark><\/a>t<\/mark><\/a> in an under-construction project. <\/p>\n\n\n\n
(If you’re already dealing with the monthly in<\/mark><\/a>terest<\/mark><\/a> that keeps piling up, you better hope that the developer doesn’t suddenly ghost and flee away with your cash). <\/p>\n\n\n\n
2. Uncertainty Around Completion Timeline<\/strong> <\/h3>\n\n\n\n
Although the idea of owning a ‘brand-new’ home is exciting, the timeline for its completion can often be uncertain. <\/p>\n\n\n\n
Delays may arise<\/strong> from contractor schedules, funding challenge<\/mark><\/a>s<\/mark><\/a>, or permit issues. This unpredictability can affect financial forecasts<\/strong> and result in higher carrying costs<\/strong>, including mortgage payments, insurance, and property taxes. <\/p>\n\n\n
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3. Quality and Safety Concerns<\/strong> <\/h3>\n\n\n\n
Not every home is constructed with the same level of quality, and there could be hidden issues<\/strong> with the building. <\/p>\n\n\n\n
It’s wise to verify that the construction<\/strong> company provides truthful outcomes and adheres to local building codes. Bad construction can result in expensive repairs and safety risks, particularly if shortcuts were taken during the original build. <\/p>\n\n\n\n
Inspect and evaluate the property before agreeing to purchase, as unseen problems could lead to significant risks<\/strong> later. <\/p>\n\n\n\n
4. <\/strong>Legal and Compliance Risks<\/strong> <\/h3>\n\n\n\n
Which leads to the next point, which is potential expose to legal complications<\/strong>. <\/p>\n\n\n\n
If the property is not properly permitted<\/strong> or does not meet local zoning laws, you may find yourself dealing with legal disputes<\/strong>, fines<\/strong>, or forced renovations<\/strong> to bring the home into compliance. <\/p>\n\n\n\n
Additionally, there could be outstanding issues with contractors that could complicate the transfer of ownership. <\/p>\n\n\n\n
Again, double check<\/strong> the property’s legal standing and ensure that all permits and approvals are in place before investing in under construction homes. <\/p>\n\n\n
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5. Market Risks and Uncertain Resale Value<\/strong> <\/h3>\n\n\n\n
While a new construction home may offer potential for increased value once finished, the real estate market can be unpredictable<\/strong>. <\/p>\n\n\n\n
The property’s value may not appreciate as expected, especially if the market experiences a downturn or if the home’s location becomes less desirable over time. <\/p>\n\n\n\n
If you are planning to sell the home after completion, there is always a risk that the final resale value will not justify the investment<\/strong> made in completing the home. <\/p>\n\n\n\n
Furthermore, changes in market conditions during the construction period—such as a shift in buyer preferences or an increase in interest<\/strong> rates—can impact the sale price. <\/p>\n\n\n\n
Mistakes To Avoid<\/strong> <\/h2>\n\n\n\n
1. Neglecting Inspection<\/strong> <\/h3>\n\n\n\n
One of the biggest mistakes you can make is neglecting a thorough inspection of the semi-completed home.<\/p>\n\n\n\n
Simply assuming that everything is in order because the property is “almost finished” can lead to costly surprises. <\/p>\n\n\n\n
Always hire a professional inspector<\/strong> who can assess the structural integrity of systems like electrical, plumbing, HVAC and others. <\/p>\n\n\n
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2. Underestimating Completion Costs<\/strong> <\/h3>\n\n\n\n
It’s common to underestimate the expenses involved in completing a home, leading many investors to miscalculate the total costs. <\/p>\n\n\n\n
To avoid this mistake, get detailed quotation<\/strong> from contractors and professionals who can help you assess the total cost of finishing the construction. <\/p>\n\n\n\n
Add a buffer<\/strong> for unforeseen expenses to ensure you’re financially prepared. <\/p>\n\n\n\n
Consider:<\/strong> The total cost you need to cover, the 10% down payment, legal fees, rebates, cashback, and other hidden inspection, all of these are often hidden in the selling price and may be added to your mortgage loan. <\/p>\n\n\n\n
3. Not Verifying Legal and Compliance Status<\/strong> <\/h3>\n\n\n\n
Never assume that the property is in good legal standing simply because it’s ‘under construction’. <\/p>\n\n\n\n
Always verify that the necessary permits<\/strong> and zoning requirements<\/strong> are in place. Make sure the previous owner or developer hasn’t left any unresolved legal issues. <\/p>\n\n\n\n
Doing this will help you avoid costly legal battles <\/strong>or the need to redo work to meet code requirements. <\/p>\n\n\n
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4. Ignoring Market Conditions<\/strong> <\/h3>\n\n\n\n
Even if a semi-complete home seems like a bargain, don’t forget to consider the broader market conditions<\/strong>. <\/p>\n\n\n\n
In some markets, the value of a property may not increase significantly after completion, or the cost of finishing might outweigh the potential profit. <\/p>\n\n\n\n
Always conduct a thorough market analysis before purchasing to ensure that your investment will yield a positive return<\/strong>. <\/p>\n\n\n\n
5. Fail to Plan Ahead <\/strong> <\/h3>\n\n\n\n
If the property is delayed in terms of completion or if you’re facing long construction timelines, make sure you’ve planned your finances<\/strong> accordingly. <\/p>\n\n\n\n
Anticipate potential holding costs, such as loan repayments, insurance, and property taxes, and ensure you have the liquidity to cover these expenses during the construction phase. <\/p>\n\n\n\n
Investing in an under-construction home can offer enticing opportunities, but it also presents significant risks<\/strong>.<\/p>\n\n\n
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Uncertainty around completion timelines<\/strong>, unexpected costs<\/strong>, quality issues<\/strong>, financing difficulties<\/strong>, legal complications<\/strong>, and fluctuating market<\/strong> conditions can all turn a seemingly profitable investment into a challenging and costly endeavor. <\/p>\n\n\n\n
As our IQI Agent from AG Group, Putera Amirul Haziq suggestsed, home investors should conduct thorough due diligence, carefully assess the property’s condition<\/strong>, and look for potential risks<\/strong> to ensure they are making a sound financial decision.<\/p>\n\n\n\n

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