Buying a condo in Toronto is a dream of every youngster and every single real estate investor these days.
Buying or investing in real estate is a big decision that requires lots of money and proper planning. You need to know the ins and outs of everything related to the condo market in Toronto. What are the additional costs(hidden & visible) involved in the process? What are the major factors that can make your decision of investing in the pre-construction condo market a successful one?
1. Very first thing you need to know is the location of the property, what kind of neighbourhood this condo building is going to be located in. Is it a ghetto neighbourhood or an upscale trendy one? The location makes a big impact on your rate of return on your investment, so you have to have some knowledge about the neighbourhood before making your decision of buying a condo in any location.
2. Another important factor that is also related to the location somewhat is public transit. The majority of the population living in the city, closer to the downtown do not like to keep a car so public transit is very important. A couple of minutes’ walk to the subway or bus stop plays a great role in making your investment a great investment and provides you with a better return on your investment.
3. If you are not planning to move in & it is your investment property, you need to rent it out to a tenant. Once again location plays an important role in this aspect as well. If you are buying closer to a college or a university, your target tenant would be a student or a teacher. If you are buying closer to the financial district then you are looking for someone working in the stock exchange, a bank or something similar. So you need to keep that in your mind before when you are deciding on your purchase. It can be decided later on as well but going with a solid plan always makes your life a lot easier.
4. Now we discuss the price point of your investment. Everyone has their own budget so do you. According to your affordability, you decide on the project. The condo project in high-end locations or in the core downtown area is costlier than the uptown condo projects. But at the same time, the rent is also more in prime locations and the prices grow faster in better locations than not so prime locations. Once again it depends upon your capability or on your financial strength.
5. It was not that major factor a few years ago but in the last few years since the cost of the condos is on the rise and with everything getting so expensive the development charges have gone somewhat out of control if not paid attention to in the beginning. Since the increasing cost of everything, it is better to cap this cost with the builder at today’s cost, but if not done in the beginning you might need to pay the increased cost at the time of the closing. Your realtor can play an important role here to save a lot of money if he knows what to do in this situation.
6. Now after looking at the location, Transit, cost & development charges another big point to discuss is the reputation of the developer or the builder. All the builders are not the same. Some of them keep their promise to finish the project on time others delay the delivery of the condo units. And a couple of years ago we heard that there was a developer who ran away with the deposit money of the purchasers. So working with a reputable developer is advisable even though that was a rare scenario. Bigger developers have a reputation to keep in the market so they strive to achieve excellence.
7. If you do a little bit of homework and try to see if any major changes are coming in the demographics of the location that you are planning to purchase in, can be a big boost to your investment goals. Suppose there is a new mall or plaza with big-name brand stores that are scheduled to open in a few years or the subway extension is happening soon or something similar is being planned for the area by the city hall. That could be a game-changer scenario.
8. Pre-construction condo investments most of the time are not the quick flips, they require long term investment plans. In the long term, I mean at least 3 plus years if not more. I have seen most buildings get delayed to give occupancy to the purchasers, In most cases, this delay works in favour of the investor/purchaser. It gives them more time so they can see the price appreciation before even they get the keys from the builder.
We have been working as real estate brokers & also as investors in the pre-construction industry for the last 13 years and answer all your questions about investing in the pre-construction condo market from our personal first-hand experience.