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Strategy
The journey toward your envisioned future begins with introspection, delving into the aspirations you foster for success, lifestyle, and financial progress. Whether you are a novice embarking on this expedition or a veteran investor seeking the benefits of pre-construction condominiums – from leveraged revenues and minimal maintenance to property appreciation. In any case, you identify as an astute first-time homebuyer who understands the advantages of pre-construction over alternative investment avenues.
With a clear grasp on your desired trajectory, turn your attention toward unravelling the intricacies of pre-construction investing. Liken it to a venture capitalist’s gambit, in which you collaborate with a developer to augment the value of a property. This entails harnessing your creditworthiness to facilitate financing for construction, committing a modest sum – typically 5 to 10% annually – in trust with an attorney. Fear not, as the Tarion Warranty Security safeguards these deposits in Ontario. In exchange, you procure a contract permitting the future purchase of a specified unit at an established price.
Ascertaining prime opportunities in new condominium developments is imperative; initial developer offerings frequently yield the most competitive pricing. Developers elevate prices as subsequent investors and purchasers express interest, granting early stakeholders valuable, developer-induced appreciation.
Upon completion of the tower, multiple options unfold before you: assigning the project (though a less favorable tactic), occupying the dwelling personally, or approaching it as an investment to be
Remember that Toronto’s real estate market has historically doubled remarkably every decade. Should you relinquish your current project, selling from a position of vulnerability will inevitably prevent you from reaping the maximum potential return on your invested efforts. Moreover, you will face opportunity costs as you must reenter the market in search of a new endeavour, potentially confronting elevated prices. Instead, consider taking possession and optimizing the revenue generated from your previously committed funds.
The choice to invest in a pre-construction condominium, you’ll seize possession upon its completion, capitalizing on lucrative revenue streams and optimizing property appreciation. As a strategic investor, you’ll continually explore new ventures to expand your portfolio. Refinancing the property and extracting equity will bolster your financial standing when the opportunity arises.
What advantages does this entail? Firstly, by renting out your property, building equity becomes passive as others contribute to acquiring your valuable asset. Secondly, the withdrawn sum is not subject to taxation as it is considered a loan (please consult with your accountant as this is not tax advice). This arrangement significantly enhances your purchasing power for additional properties since income from tenants is supplemented by a non-taxable loan. Moreover, upon selling the property, taxation applies only to the profits in proportion to the ratio between the loan and additional earnings. In effect, you’ve reduced profit liability while expanding your asset base – assets that could continually attract more funding. Importantly, remember that the renter bears the responsibility of financing said asset. Even in shortfall cases, these deficits can often offset tax liabilities. (please consult with your accountant as this is not tax advice)
As you realize the immense potential of pre-construction condominium investments, outlining a game plan becomes paramount. Now, it’s time to assemble an adept team capable of achieving your vision.
(please consult with your accountant/Legal counsel as this is not tax advice)
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