What Are the Benefits of Buying Pre-construction?
Buying pre-construction can be unnerving. The due dates can change, and the construction process is confusing. Many will advise you to walk away. On the other hand, there are many benefits to doing so. First of all, keep in mind that you should consult with a lawyer before making any purchase. With a good lawyer at your side, buying pre-construction is a good investment.
First and foremost, that is, the actual price you will be paying for a pre-construction condo versus a resale one. For example, you can buy a pre-construction, 2 bedrooms, condo for just under $350 thousand in Don Mills & Eglinton. A great area surrounded by many amenities including shops, offices, museums, and city centers. In the same area, a condo of similar size, also 2 bedrooms will cost you $450 thousand resale. That’s 100 thousand dollars difference.
While the value of both will rise, the value of pre-construction will rise faster. The minute the building is complete, its price becomes higher. That is to say, not only does it cost you less in total, but you actual make more if you plan to sell it later.
Time is on your side
When buying resale, if you do not put a 20% down payment, your monthly installments will be larger. Also, you’ll have to pay CMHC fees. You either need more money to start with or have to pay the expensive monthly installments and fees. On the other hand, by buying pre-construction, you almost always place a 5% down payment. As the condo is being built, you add installments. In the 2-3 years it takes for a building to be complete, your total down payment will be 20% or more.
In other words, there will be no CMHC fees and smaller installments when you move in. The time it takes to complete the project gives you time to collect the money. This works in your favor if you are an investor as well. You may choose to lease out the condo. The rental payments will cover your costs and possibly leave you with a profit. Also, as time passes your property gains value. So, if you buy pre-construction for say $650 thousand, by the time it’s complete the condo can be worth $800 thousand or more.
The floor plan
When you buy pre-construction, you choose a condo depending on the floor plan. The blueprint can be changed by the construction company when needed. However, you can also make changes. If you don’t want an open plan kitchen, for example, a simple change is made. If you want a lot of space, walls can be erased where possible. This depends on the integrity of the building of course, but saves a lot of money in the long run.
If you buy resale, every change costs money and a lot of it. Taking down walls means you have to hire workers. You also have to pay for safety regulators to come by. Not to mention the unwanted surprises that come along the way. Another option is to find the perfect condo for you, which again means money. Either way, if you plan to have your dream home, building it from scratch is usually the best way to achieve your goal.
A home, like anything else, ages. With age comes, unfortunately, decay. When buying resale, no matter how beautiful a condo is, some work has to be done. You can buy a condo that looks great, but cracks are hiding under the fresh paint. Or the pipes are old, and you need to hire a plumber to install new ones. Or the wiring is from a different time, and you need an electrician to update the layout of the sockets.
When buying new, pre-construction, everything installed is new. Yes, until the condo is complete things will change if need be. However, when you finally move in no work needs to be done for the next 10 years or so. The flooring, the pipes, and the walls; everything is new.
If you are looking to by a Loft in Toronto or a condo, you always have to consider all your options. Hiring a lawyer is always sound advice. Whether you decide to buy pre-construction or not, keep in mind the actual benefits. Many will tell you to turn away, but know all your options before putting a down payment. Perhaps not for everyone, but buying pre-construction is well worth the wait.
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