An Investor’s Guide to Pre-Construction Condos
Jun 16, 2022 / Investing
The Greater Toronto Area has one of the hottest rental markets in North America. As the city continues to grow and welcome new residents, rental housing will remain in high demand for many years to come. With strong rental trends and plenty of exciting new condo developments in the city, it is easy to see why the GTA’s pre-construction market has become popular with investors.
If you’re looking to buy an investment property for the first time, pre-construction condos are a great way to start. From greater inventory selection to less frequent repairs and other perks, pre-construction developments have several unique advantages for investors.
That being said, buying a pre-construction condo is a specialized process and there are a few things you should know before you begin exploring properties.
Start With An Agent
When it comes to pre-construction condos, one of the most common misconceptions amongst buyers is that there’s no reason to work with a real estate agent. This couldn’t be further from reality. In fact, the pre-construction buying process comes with a number of complexities and special considerations. Not only can an agent help you navigate this unique space, but their local relationships can offer you a huge advantage from an investment perspective.
Alongside a smoother sales process, working with an agent often means having access to exclusive developments you otherwise wouldn’t. An agent can also help you secure financing and connect you with helpful resources throughout your property management journey.
Curious about investment properties? Explore current pre-construction projects in Vaughan and beyond here.
Understanding Costs
Like any major investment, it’s important to understand all involved costs before signing on the dotted line. In addition to the usual ongoing expenses, you’ll also need to budget for surprise costs and irregular circumstances, such as major repairs or inoccupancy. As a condo owner, your largest regular costs will be condo fees. These are in addition to your mortgage. While condo fees are often less costly in newer developments, they are set to inflate over time.
One of the great benefits of an investment property is passive income. However, with pre-construction, it will be a few years before you start seeing it. Keep this in mind when building your financial strategy.
Timing Matters
If it’s your first time buying a pre-construction property, you may be unaware of how timing can impact costs. Units in pre-construction developments don’t enter the market all at once. Rather, they become available to buyers within unique timeframes known as access levels. These access levels vary based on the buyer’s relationship to the developer. Essentially, the closer you are to the developer the earlier access level you’ll have.
So why is access level timing important? Purchasing a pre-construction unit at an earlier access level often means paying less (along with other unique benefits). As an investor, reducing upfront costs can have a significant impact on your profits. When you work with a well-connected real estate agent, they can help you gain access to new developments as early as possible.
Buying an investment property for the first time? Explore these helpful articles.
- How to Build With Confidence
- 3 Benefits of Buying a Pre-Construction Property
- 5 Tips For Getting a Mortgage
Stay Informed About Delays
Delays are an unfortunate reality in the world of pre-construction. As an investor, delays may impact you differently than future residents. Although you won’t be stranded without housing, a delayed tenancy could mean months or even an extra couple of years without earning passive income. In most cases, buyers will be entitled to financial compensation when delays reach a certain length. In more drastic circumstances, you’ll even have the option to terminate your contract and be refunded.
Looking for more information about purchasing property in the GTA? Check out these blog posts.
How We Help Investors
If you’re looking to buy an investment property in the Greater Toronto Area, the Lino Arci Team can help. Our VIP Buyer Program allows you to enter the market confidently. With our extensive local relationships, investment expertise and advanced sellers marketing program, you’ll have access to virtually every available property for the best price possible.
Buying a condo is a big decision, and our team can provide you with peace of mind during an often overwhelming process. Plus, we guarantee you’ll be happy with your purchase or we’ll sell it for free.
Interested in buying a pre-construction condo? As GTA experts, we are here to help. Reach out today to begin the exciting journey of condo ownership. Contact us.
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