When you see cranes in the distance, the building kind not the flying version, it’s very likely they’re new condominium towers going up. And it’s a trend not just for urbanized, densely populated areas. Condos can be seen going up in various parts of a city with a response to the desirability and new construction for town homes and condosaffordability of a specific part of town. What was once an old parking lot or a vacant storefront is now a great big hole, just waiting for a set of brand new homes.

As a real estate investor, you have the opportunity to participate in that boom either by being a private investor pooling money with others to finance the construction or you buy an individual unit to keep for long term appreciation and monthly cash flow.

If you’re considering investing in the construction of a condo or townhome project, you can bet the developer didn’t throw a dart blindfolded at a map to find out where to build, how many units and what the units will cost and rent for. Indeed, the developer has performed the necessary due diligence citing current and future demographic trends, real estate values and population growth. All you need to do is review and validate the information on your own. There are no guarantees but that’s with any investment. If you’re not sure about it, then don’t invest. It’s really all it boils down to.

On the other hand, you might want to buy one or even several individual units to rent out once the project is completed. Again, you can get a firm idea on the future value and market rents for the area before the project is finished. One of the oft overlooked aspects of new condo or townhome construction is whether or not the project has been or will soon be approved by FHA, VA or any of the conventional guidelines set forth by Fannie and Freddie. With an approval, it’s easier to get financing. When and if you ever decide to sell on of your investments, it’s critical to make sure the units conform to current lending requirements.