Condos are surely a great option of whether to live in or for investment. Investors usually prefer to bid their money on pre-construction condos. Getting your hands on a property in its early construction stage can benefit you in numerous ways. Are you thinking about investing in pre-construction condos? If you are then there are a few things you should be aware of before investing.
1.Know your builder before investing
Evaluating your builder is more crucial than evaluating the property when it comes to pre-construction condo investment. Choosing a reputable builder lessens the risk while investing in a pre-construction property. You should start by checking the builder’s closing history. This can give you more insight into the resale value of the property and will also help you decide whether or not it’s a good investment. Delays are quite inevitable in the case of pre-construction properties but anything that goes over the typical 3 to 8 months of delay is not a good thing. So if the developer’s past projects follow a continuous pattern of delays for more than a year then it’s better to find someone else.
2. Be aware of the two closing dates
Yes, you heard it right. Pre-construction condominiums have two closing dates – interim occupancy and the final closing date. During the interim occupancy period, you’ll have the keys to your property but you can’t move in just yet. You can only settle down in your property after the building gets registered and this usually takes a good few months. During this time you’re obliged to pay an interim occupancy fee to your builder. During the final closing, the building would have completed registration and you can be the proud owner.
3. Take full advantage of the 10 days cooling-off period
A blessing for investors that comes with Ontario’s real estate law is the 10-day cooling-off period that pre-construction property investors get. This offers you 10 days from the date of signing to thoroughly evaluate and reconsider your decision. This cooling-off period is no conditions applied – obligation and penalty-free. So we recommend that you use these 10 days to your advantage. Get your a lawyer and review the agreement and if you’re not contempt with your property then look for other options, compare the prices and then make the final call.
4. If you want out then there is an option of an assignment
You can sell your Pre-Construction Condo even before its closing dates. The whole process is called assignment as you’re only assigning the contract between you and the builder to a new buyer. But beware of the loss that you might have to deal with if you decide to go for this option.
5. Study the market
If you’re buying a pre-construction property for resale then it’s important to be aware of what’s happening in the real estate market. You can only know if you’re getting a good deal by thoroughly studying the market and working with a realtor.
6. Try to buy early
As more and more units get sold out, the prices tend to increase for condominiums. Builders have a tendency of putting the first few units out in the market for comparatively lower prices to attract more investors. So getting your hands on a property during that time might be beneficial.
7. HST rebates are possible
Harmonized sales tax or HST is included in the property price when you buy it. But if you’re buying as an investment then you’ll have to pay an ample amount as HST again. But a complete rebate is possible if you file an application within a year with proof that you rented the unit out.
8. Keep an eye on the floor plan
Even if your builder is trustworthy and reliable, they sometimes tend to make a few changes here and there to the floor plan. So in the end, if you want the exact property that you paid for then we advise you to keep a track of any alteration in the floor plan of the property.
9. Don’t spend too much on unnecessary upgrades and amenities
The number one thing that you should remember when Investing in a Pre-Construction Condo is that you’re not buying for yourself or your family. Skipping on a particular upgrade or choosing to leave out fancy amenities won’t cost you a fortune. Keep in mind that unless you’re in the highest income area of the city then nobody would be willing to pay a huge amount of money for just the upgrades.