As Toronto condo prices continue to soar in value (currently 12% year over year), we are constantly asked, “should I buy pre-construction or resale“? What are the advantages of buying one versus the other? Speaking from personal experience, we have had great success investing in Toronto’s pre-construction condo market. In fact, over the last decade, we have partnered with hundreds of clients. We help them to achieve their financial goals with pre-construction in the Toronto real estate market.
What’s the typical profile of a pre-construction investor? Busy and hard-working professionals. These individuals own their principal residence. They have seen the Toronto real estate market continue to increase over the years. Meanwhile, RRSPs and other investments flatlined or showed erratic or anemic performance. This is why buying pre-construction is an excellent way for busy professionals to invest in a stable long-term investment vehicle that is relatively passive.
It also serves as a way for first-time home buyers to get into the Toronto real estate market at a time where they may already be priced out. We have helped many first-time buyers get into the Toronto real estate market by leveraging the extended deposit structures and completion dates to save up over time. When it comes to buying or investing in pre-construction real estate, there are many advantages over buying resale or investing in different industries altogether.
How To Buy A Pre Construction Condo in Toronto
The process of purchasing a pre-construction condo is slightly different than a simple condo purchase. While the process is different, it’s still quite simple as soon as you understand what the basics of the purchase are. Here’s an explanation of how it works and the steps to take to purchase a pre-construction condo.
1. Choose The Project
There are some important factors to consider when purchasing a pre-construction condo. For starters, you’ll want to make sure you’re choosing from the right project. Will you be using it, or use it as an investment? If it’s for you, you’ll want to ensure that you’re selecting the right layout with the right amenities and conveniences. If it’s an investment, you’ll want to consider the location and potential rental income.
2. Select Your Suite
After you’ve chosen the right project, you’ll want to choose your suite. Look over the potential floor plans, the view, the price and the premium for the particular floor that you’re on. This will all be dependent on whether or not it’s going to be an investment or owner-occupied. There are typically many great options for suites so you’ll want to go over all of your options carefully before making your decision.
3. Submit A Suite Reservation
After you’ve narrowed all of that down, you’ll want to submit a suite reservation form. This is when an agent or broker will aid you in completing the suite reservation form. This, along with your ID will be required. Submit your reservation form to “choose” your unit. This reserves the unit that you are attempting to purchase. You’ll have to go into an office to sign these documents. This will also give the builder the required time to prepare the paperwork to ensure that you’re on the right waiting list.
4. Suite Reservation Confirmed
Reservations will need to be confirmed with the builder to ensure that the suite, price, and floor that you’ve selected are available. After this, you’ll be given a date and time to sign all the necessary documents.
5. Sign The Agreement
Now you’ll sign your new agreement. You’ll go to the office and have your funds and your ID at the ready. You’ll sign the agreement to purchase the sale. This will detail all of the information and where your parking locations and lockers will be that are included in the purchase of your new condo unit. The sales representative will guide you through and answer any questions that you may have regarding your new purchase.
6. 10 Day Recession Period
After this, you’ll have 10 days to review your order and arrange any further required finances. Here is an article for you explaining this process and more. You may cancel your order at any time during this 10 day period without penalty. Be sure to carefully read all of the information and details during this 10 day period to avoid any misunderstandings or changes of heart. Once this time period is over you’re going to be buying the condo unless you change your mind during this time period.
7. Firm & Binding Deal
On day 11, the deal with be automatically firm. Your first deposit will be cashed. You’ll now be responsible to make your payments in a timely fashion.
Your new condo unit may be later assigned to another or it will be yours upon closure. You can also find out more details here.