The prospect of a pre-construction unit offers those willing to wait a wealth of pretty great financing options if you’re in the market for a condo property.
Today we’ll look at the types of people that can benefit from the processes involved in the pre-construction build, and why these are advantages in the first place.
A place for your adult children
Do you have teenagers? Or perhaps young adults starting school abroad? If you’re the type of parent that wants to gift your kids with their own place once they’re ready to leave the nest, a pre-construction unit can be purchased to eventually align with their graduation into adulthood.
If you can’t pay off the unit in one fowl swoop, you could get your youngster to contribute to the mortgage or cover the condo fees as a way of gently throwing them into the real world. As their income increases, so can their financial responsibility with the unit. Having your kid(s) figure out the ins and outs of renting, mortgage payments and bills through the use of a pre-construction unit could be a wise step, but only if you’re a strong landlord who won’t let things slide.
Young adult searching for their first place
If you aren't privileged enough to have a condo purchased for you by your parents, who says you can't do it yourself? Entry level pre-construction units are a handy passage into real estate, and if you buy in the right neighbourhood, that entry level unit will appreciate and allow you to move up into a better unit once resold.
Start saving money as soon as you can by working those student jobs and work on getting a down payment together – maybe your parents will be able to help you here. The down payment on your unit is usually the biggest hurdle for a new property buyer. Because of the structure of a pre-con purchase, the down payments can be staggered, but it’s best to have all the necessary funds ready before you sign onto any dotted line.
Though this is a daunting and relatively adult decision (you’re effectively buying a home after all), the purchase of a condo unit early on in adulthood can help young adults bypass the highly competitive rental scene in big cities like Toronto and Vancouver. You'll need a bit of a push, but owning a piece of property ahead of your peers will avoid the trap of lifelong rent payment, something that often pays the mortgages of landlords anyway. With rents in urban Canadian cities hovering around an average of $2,000, that money could be advantageously directed into your own mortgage, instead.
Rental property or investment property opportunists
Many of those hopping on a pre-construction proposal are likely investors looking to get the best return on their money. Pre-construction condo opportunities are perhaps best suited for someone able to wait out the long game involved in the building process. Established and new investors alike can watch the building take shape, close, then either rent out the unit for a while and/or sell it again.
People looking for stable income properties should focus on popular areas that will be in demand for years to come. They should also understand which unit types are more popular; studio, one- or two-bedrooms?
Usually when the building closes and the land transfer occurs, the pre-construction unit will already be worth more than you paid for it during pre-construction. If you’re into property flipping, or increasing the value of a property to sell it afterwards at a profit, a pre-construction condo can be a sound investment.
Though there are some standard features the will get installed in a condo unit, the unit owner has the ability to change many of the hardwares to taste. This means almost anything is available to be upgraded, but make sure to check out the condo rules ahead of time.
Foreign or nearby buyer anticipating move
If you’re living out of the city or country, planning or anticipating a move somewhere specific in the next couple of years, a pre-construction unit can be a smart decision. It could be for family matters, better schools, a new job, or simply a change of scene, having somewhere to live at a concrete time could take a lot of hassle out of the whole re-location, wouldn't it?
Make sure to understand any foreign buyer stipulations if you're not a Canadian citizen, and get a real estate agent who can act on your behalf locally. Always research the company beforehand so you can find out if the developers have a reputation for completing builds on time.