How-to Guide
Toronto Pre-Construction Condo Deals
01
Right Project
02
Purchase First Round
03
Maximize Profits
04
Expand & Repeat
Investing in pre-construction condos in Toronto offers a lucrative opportunity in the flourishing real estate market.
As one of North America’s most diverse and rapidly expanding cities, Toronto’s skyline provides an ideal setting for intelligent investors to reap substantial returns.
The robust economy of Toronto, along with low housing starts and record immigration levels, fuels the demand for residential properties. The city’s choice of business hub for major companies and industries contributes to increased job growth and income. Consequently, high-paying jobs attract professionals looking for upscale urban living spaces, leading to higher demand for modern condos in prime locations.
Pre-construction condo investments have the potential for significant value appreciation.
Investors secure lower prices before public sales commence by acquiring properties at the initial development stages. As construction moves forward, these properties’ demand and market value generally rise, resulting in exceptional capital gains and return on investment.
A pre-construction condo is an investment partnership with developers to optimize an undervalued asset and generate added value.
This Partnership between you, the investor, and the developer allows you to benefit from developer-induced appreciation, natural appreciation, and extra income while contributing positively to the communities where developments occur.
Real estate agents sometimes overcomplicate the process; however, working with a pre-construction specialist ensures maximum ROI on your investment with minimal issues. This guide on pre-construction investing simplifies and highlights four critical aspects for your convenience.
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Four steps how to invest in Toronto's preconstruction condo market
Selecting the right project
Focus on three key factors when selecting a project:
a. Location: Consider the location’s amenities, conveniences, and proximity to mass transit. This is important for both investors and end users.
b. Lifestyle requirements: End users should ensure the location meets their needs.
c. Investment potential: Investors should look for attractive developments to tenants or future buyers, which can lead to greater appreciation.
**Bonus – Pick the right developer. They are your partner in your pre-construction condo investment.
Purchase in the first round
Investing in the initial phase of any pre-construction condo project guarantees the highest potential ROI, especially when compared to units sold later in the same development.
Maximizing your profits
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Expand and repeat
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Invest in Toronto’s Preconstruction Condo
Understand the concept of Pre-construction Condos
Understand the concept: Pre-construction condos are purchased at current market prices but will be built in the future, usually three to six years later. You select your suite from the developer’s floor plans and marketing materials.
Process of buying a pre-construction condo:
Worksheet and Deposit: Narrow down your selection, complete a worksheet, and provide a bank draft for the first deposit. This step shows your seriousness as a buyer. c. Sign the Agreement: Once a suite is allocated to you, sign the purchase and sale agreement in person or via DocuSign. This agreement is sent to the developer for execution. d. Cooling Period: After signing, a 10-day cooling period begins. Use this time to review the agreement and make any necessary decisions. ** Consult with a lawyer who understands pre-construction sales.
Benefits of pre-construction condos
Deposits are spread out over time, allowing you to save up between installments. No need to secure a mortgage until the building is complete, giving you time to qualify for one. It is a passive way to invest in real estate without the hassles of being a landlord.
Be flexible
To secure a suite, be flexible with your floor plan preferences and open to different floors. Flexibility increases your chances of getting the best inventory, saving money, and receiving exclusive incentives.
Consider the Developer of you Preconstruction condo investment
Research the developer’s experience and reputation in building similar projects.
Check feedback from owners in their existing buildings.
Ensure that the developer has a track record of delivering projects on time.
Understand pre-construction condo Incentives
Developers offer incentives as bonuses in the purchase and sale agreement.
Incentives can include free or reduced-cost assignment, the right to lease during the occupancy period, and capping development charges.
Review the incentives offered by the developer and understand how they can benefit you financially.
Understand the Closing Process For pre-construction condos
There are two phases of closing: interim occupancy and final closing.
Interim occupancy is when your suite is complete, but the common areas are unfinished. You pay an occupancy fee during this period.
Final closing occurs when construction is complete and the city finalizes inspections. Your lawyer registers a mortgage, and the suit gets transferred to your name.
Understand pre-construction condo Incentives
Developers offer incentives as bonuses in the purchase and sale agreement.
Incentives can include free or reduced-cost assignment, the right to lease during the occupancy period, and capping development charges.
Review the incentives offered by the developer and understand how they can benefit you financially.
Communication and Updates
You have little to do as the owner between the purchase and receiving the keys between the purchase and receiving keys to your condo; you have little to do as the owner.
Expect communication from the developer regarding construction progress and milestones.
Attend the pre-delivery inspection to identify any outstanding issues before final closing.
Budget for Additional Closing Costs
Plan to allocate 0.5% to 1% of the purchase price for additional closing costs beyond development charges.
This may include home warranty, utility hookups, and HST payable.