Pre Construction Condominium Investments: Your Complete Guide
A lot of investors are rapidly driving towards the real estate market and there is no second thought in that as the market is performing right. This is why many people are moving towards investing in homes and buildings. Purchasing a pre-construction condo is a great choice because it lets you spend your money on a long-term investment. Pre-construction condos investments are considered to be passive since you continue to get returns once you put your money in it.
For first-time home buyers, it is a great choice to go for such investments in the real estate industry. If you are manifesting to buy new condos, then it is good news for you that condo sales are touching heights recently.
There is no question about the fact that more and more investors want to invest in pre-cons condos because the competition in the market is also growing. You will also be glad to know that condo occupancy rates are impressive as there are increasing numbers of buyers out there. That is why we have researched the exponential growth of the industry and have brought to you the top tips for investment.
But first, know why you should invest in this market.
Reasons to Invest in Pre-Construction Condos
Extended deposit program
Buying a new condo may need you to pay a down payment of 15-20% and the deposits are often spread out. You can make the payment during an extended period of 18 to 24 months. More often, if you do not need to pay the 20% down payment, it helps you to save money. In a few cases, you have the chance of using a line of credits to claim more spread out on the payment deposits.
Throughout the 3 to 5 years of the construction period, you do not have any probability of mortgage obligation other than the payment deposits until closing. Therefore, you can get pre-construction condos in GTA without appearing on the credit bureau. Moreover, it lets you enjoy the flexibility of owning a condo and not impacting the debt ratio or the chance of getting debt from any other bank or lender throughout the period.
When it is to first time buyers, the extended deposit program and the time it consumes for the whole construction process can help you save. A majority of first-time buyers consider buying pre-construction condos as a long term investment or saving technique. It is because you are more determined to save up when you have a condo to pay for.
Gentrifying is the best choice
Buying a pre-construction condo is like buying an asset that might get costlier in the future. It is like investing in the stock market. Therefore, you can invest the amount according to current market prices and expect that the price of your condo will rise in the future. It has been a fact of the past that building prices increase in the long term. So there is a great probability that you will get enough appreciation by purchasing condos in gentrifying neighbourhoods.
This is when the transit and infrastructure is planned to be constructed. Since the estate you are buying will take at least 4 to 5 years to get ready, it is an intelligent choice to get a new condo in a neghbourhood that is rising. Such areas may have a lower buying price and also a greater probability of being more successful than others.
Ownership or investment in real estate may be rewarding and interesting, but in most cases, owning real estate is a hands-on endeavour. This means that a lot of people are missing out on the chance to invest or acquire. The three to five years during which work may be left unattended is one of the major advantages of buying pre-construction property.
When the building work is completed, you should be able to find a tenant using the services of a licenced real estate agent. Realtors also provide property management services, which you may negotiate with them. There are warranties on any building maintenance concerns that arise during the next two years. As a general rule, new structures come with a guarantee of up to seven years. This guarantee and protection for resale does not apply to new construction. A modest pre-construction condo may thus be managed in a short period of time.
Things you should know while investing in a condo
Before you invest in a building, invest in a builder
Investing in a pre-construction condo becomes less dangerous if you only invest in recognised developers.
If you’re looking for a developer or builder with a proven track record of completing projects on schedule and without unnecessary delays, look no further. If you want to achieve the greatest resale condo value, you should look into the post-closing history of the developer. This is also true if you want to resell condominiums as a company.
A cooling-off time of ten days should be understood.
Before condominiums are developed, there is a cooling-off period for signed contracts. GTA legislation mandates a 10-day cooling-off period for all new condominium transactions. If you’re in the pre-construction condo investment market, you’ll have an edge over those in the resale market because of this benefit.
Within 10 calendar days after signing the agreement, you have the right not to purchase the condominium. During the 10-day grace period, there are no obligations, penalties, or “gotchas.”
Use the 10-day cooling-off period to your advantage. With buildings selling out in as little as 3-6 months after their initial sale, Toronto’s real estate market is booming. On a regular basis, pre-construction condo prices are raised by the developers and incentives are changed when the sales to the public begin.
Buyers of new condominiums must pay HST
If you buy a pre-construction condo, fortunately, in most circumstances, you may get a full or partial refund. Depending on whether you (or a member of your immediate family) will be the final user of your unit or if you want to rent it out, the regulations and criteria change. You should consult with your lawyer and accountant before making a major purchase.
Gear up your condo investment game right now.