Purchasing before construction is completed has many benefits. However of these, Here are the top five justifications for making the investment.
1. AN EXTENDED DEPOSIT STRUCTURE
The deposits (between 15 percent and 20 percent) are frequently stretched out when buying a new unit. This may take between 18 and 24 months. Particularly, the absence of a 20 percent down payment requirement enables investors and end users to accumulate savings. Alternately, in some circumstances, you can use a line of credit to further space out your payment deposits. Other than making the deposit payment arrangement over the 3- to 5-year build period, there is no mortgage responsibility until closing. In actuality, the mortgage doesn’t start until closing. This implies that although you own a property that is still under construction, it won’t appear on your credit report. And this gives you the freedom to buy real estate in Toronto without having an impact on your debt to income ratio or your capacity to borrow money from a lender during this time. The extended deposit schedule and length of time between the start of construction and building completion allow customers to accumulate savings, whether they are first-time buyers or investors. It is viewed as a forced saving/investment plan by many of our first-time home purchasers and investors. After all, it’s simpler to save money when you know you need to buy a condo.
2. GENTRIFYING IS YOUR BEST BET
Pre-construction purchases resemble futures trades on the stock market. In essence, you’re investing with the expectation that prices will grow in the future by purchasing now. Residential real estate prices have consistently increased over the long period. For this reason, purchasing real estate in rapidly gentrifying neighbourhoods can increase your chances of appreciation. The construction of significant transit or infrastructure is planned for this area. It makes sense to purchase a new home in an area that’s on the rise as the property you are buying won’t be available for 3–5 years. These neighbourhoods will offer lower entry points for purchases and a greater chance of outperforming the general market.
3. HANDS OFF
Owning real estate in Toronto may be a highly hands-on experience even while investing in and owning is thrilling and lucrative. Due to this, a lot of prospective buyers and investors pass up this chance. The first three to five years, when building is completely passive, are one of the biggest benefits of purchasing pre-construction. An investor might hire a certified realtor to rent out their property once the building is finished. For a little monthly charge, a realtor can even maintain the property. In light of this, Tarion’s warranty covers any building maintenance difficulties within the first several years. Particularly, all newly built homes in Ontario come with a comprehensive warranty for up to 7 years. This kind of warranty and protection for resale buyers might not be offered or go as far as it does for new construction. As a result, managing a modest condo investment portfolio would need little effort or time.
4. A MORE CIVILIZED PROCESS
When buying a resale, the most desirable condos frequently go through competitive bidding processes. This is frequently complicated by hurried decisions that are occasionally only motivated by emotion. A firm offer without any conditions must be made in these situations for a competitive offer to be considered for a property. You do, however, have what is known as the 10-day cooling-off period when purchasing a pre-construction property. You can discuss the purchasing details at this point with your attorney, lender, realtor, and financial advisor. During this time, you should also conduct additional research about the builder and the neighbourhood. Evaluating a potential new house or investment opportunity is a much more methodical procedure.
5. NEW IS BETTER
Renters and purchasers are willing to pay more when it comes to the resale condo market since they are drawn in by the new and bright. However, with time, structures age, maintenance costs increase, and the Tarion Warranty programme ends. In comparison to the rest of the market, the trajectory of condo building appreciation now starts to stall. If you were to purchase a condo today, it would age and approach the end of its useful life in four years. In contrast, if you buy a new condo, you’ll have a brand-new home in four years. Additionally, it will be in demand and, ideally, have appreciated at a rate equal to or greater than the market during the construction phase.
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