Buying into the future might be the only cool way to get into the red hot Canadian housing market
With bidding wars now spreading to other cities in Canada beyond Toronto and Vancouver, investing in pre-construction projects is becoming a better option for both investors and first-time home buyers.
Ossie, an immigrant entrepreneur bought a pre-construction condo four years ago in North York, Ontario. When he sold it last year after the project completion, he made a profit of over $200,000.
There are many of such lucrative sales from pre-construction projects in many cities in Canada. Of course, it’s not all pre-construction properties that deliver such spectacular returns. But it is a good way to get into the property market.
Here are 10 reasons why investing in a pre-construction home is making more sense for immigrant entrepreneurs:
Advantages of pre-construction?
- Brand new property with 7 years of Warranty, new amenities and low maintenance.
- Lower and less stressful down payment (normally 20% of purchase price) in increments, instead of all at once (example: 5% in 1 month, 5% in 6 months. 5% in 1 year, 5% in 1.5 year).
- You make the return on the entire value of your purchase, despite only paying an initial portion (deposit payment) up front.
- Your investment appreciates in value from the first day you purchase the condo unit (after signing the agreement of purchase and sale for preconstruction unit), months before the construction starts, and will continue to appreciate until you decide to sell your unit.
- You get the lowest price available which means you are not caught up for costly bidding wars.
- You close the property (obtain mortgage) once the building is complete, years after purchasing the unit, giving you enough time to grow your income and manage your finances so you can obtain mortgage.
- You have the flexibility of selling your agreement (assignment of your agreement) before the closing date to recover your deposit payments and still make great amount of profit. This is in case you are no longer interested in the unit, or if you are not financially able to close the property (obtain mortgage), or if you have to relocate for work or other reasons.
- Once the pre-construction condo unit is built and ready to be leased, it will get more demand and higher rent compared to comparable resale or rental units. Like many other things brand new is always worth more than used-old. People will pay more for new (even if the unit is smaller compared to used/old units). They want modern finishes, latest features and amenities.
- Managing the tenants and maintaining the property are also much easier in new proprieties than older ones No need to spend time for costly repairs or maintenance (example: roof repair, furnace/ac/water tank repair, plumbing leaks, basement leaks, mold problem ETC). Everything is brand new.
- In preconstruction, you have plenty of time to find tenant or buyers for your unit. Also, there is no rent control for condos built after 2018, so you can command higher rents.
Ardi Honarmand, a platinum agent and Founder of Condos of the Six counseled: “As with other real estate investments, buyers should do their research and due diligence before finalizing the pre-construction agreement. That way, you will be making a well-informed decision that would turn out profitable.”