Buying into a pre-construction project has a range of pros and cons, especially if you’re planning to use is as a rental property.
If you’ve started down payments in the early stages of the new build, there’s going to be a bit of a waiting game involved. As you wait for the project to near completion, you’re going to start thinking about getting a tenant inside at the first available opportunity.
When can you get a tenant inside?
As the pre-construction project starts nearing completion, owners will be allowed to move into their units a few floors at a time – this is known as the ‘interim occupancy’ period.
The interim occupancy phase comes before the final closing, and it’s at this point that you should start advertising the space as a ‘new, never lived in condo rental’.
Hiring a real estate professional during the interim occupancy period is a great idea because good ones will have a waitlist of tenants looking for specific properties. Real estate agents and property management teams are also able to go through a rental assessment with you and your property to set your unit at an appropriate market rent.
The final closing will occur within six months of the interim occupancy.
If you’re looking for an HST rebate, which can return you up to a maximum of $24,000 (depending on the final sale price), there are some tax hoops you must jump through. As an investor, meaning neither you nor a family member is moving into the unit, you’ll be charged a second HST at final closing.
To get the “new residential property rebate” on this second tax, you must file for it within one year and provide the government with proof that you’ve rented out the unit to a tenant using a one-year lease agreement.
Finding a tenant
There are a variety of ways to fill your pre-construction unit with a tenant. You can take up the challenge yourself by posting advertisements on traditional peer-to-peer sites like Craigslist, Kijiji, or their competitors.
Or, you can give that administrative burden over to a professional property manager or real estate agent who will literally make it their job to find you a tenant. Real estate professionals will go over all things tax and money related, whether you’re the owner of multiple investment properties or it’s your first time!