Are you thinking of buying a pre-construction condo?
Here are four things that I like about pre-construction condos.
1. Easy Downpayment
If you're putting 20% down payment for the purchase of the pre-construction condo, usually within that first year spread out over the 365 days, you would put 15% down; 5% approximately within 30 days. It could be another 5% within 90 to 120 days and then another 5% between 180 to 365 days. That gives you an opportunity to build up your savings towards the down payment. With the final 5% for the 20% total down payment to be paid at occupancy, which is a couple of years down the line.
2. Ideal for first-time home buyers
In the Toronto real estate market where prices are high and it is difficult for first-time buyers to get into the market due to lack of affordability, pre-construction condos could be a good option. Again, by putting the down payment over the 365 days, it allows the first-time home buyer to build their savings towards the completion of the project. Because these condos usually take anywhere from four to five years to complete, it allows the first-time buyer to build up their savings, build up their closing costs, and budget for the upcoming costs of home ownership, which is four to five years down the line.
3. Smart Investing
Buying into a master plan community at an early phase is smart. The reason is as the developer releases future phases, for example let's say the master planned community has four phases, as the investor gets into phase one, phases two, three and four tend to be sold at a higher price. This is where the investor will see a decent amount of appreciation as the phases come to completion because they got in early. It is key to invest into a well reputable developer and doing the research in that specific community to understand the potential appreciation over the long term.
4. Investment Diversification
Similar to stocks, it's good to diversify. It's good to have some resale condos, maybe some duplexes, triplexes, and also pre-construction condos. Again, doing the research and understanding the neighbourhood, the developer, and what's happening in that area is key when making a decision where to put your into.
If you're thinking of buying a pre-construction condo or debating whether to get into a pre-construction versus resale condos, feel free to reach out as I have developed a condo analyzer comparing the two options.