Purchasing a pre-construction condo in Toronto can be a lucrative investment with numerous advantages. The first advantage is that you get first access to the units you want at the best price, allowing you to leverage your money for a higher return on investment.
However, it is critical to conduct research and be aware of the potential pitfalls that may arise during the purchasing process. You can avoid costly and inconvenient mistakes if you know what to look out for. Here are seven mistakes to avoid when purchasing a pre-construction condo in Toronto.
1. Not doing enough research on the developer
It is critical to select a reputable and experienced property developer when purchasing a pre-construction condo, such as Frank Gehry.
Unfortunately, many buyers make the mistake of choosing a developer solely on the basis of the structure or price. This can frequently result in subpar construction quality, delays in completion, and a slew of other issues.
Take the time to research various developers before making your final decision to avoid these pitfalls.
Seek out developers who have a track record of completing high-quality projects on time and on budget. Also, read online reviews and speak with previous customers to get a sense of what to expect.
By taking these precautions, you can help ensure that your pre-construction condo purchase goes smoothly and without incident
2. Mortgage Interest, Maintenance And Other Fees
Many people make the mistake of underestimating the costs of ownership, such as mortgage interest and maintenance fees. Mortgage interest can quickly add up, especially if you don’t plan ahead of time. Parking and a locker may be included in the maintenance fee. Be wary of any other monthly fees that may arise in addition to your maintenance fees.
Other costs may include:
- Monthly hydro bills
- Water charges
3. Not Consulting a Real Estate Lawyer
One of the most common mistakes is failing to consult with a real estate lawyer.
A lawyer can assist you with many aspects of a condo purchase, from reviewing the Purchase Agreement to ensuring that you understand your rights and responsibilities as a unit owner.
Without legal counsel, you may make decisions that will cost you money in the long run.
A lawyer can help you understand the contract, the disclosure statement from the developer, and any other legal documents involved in the purchase. They can also answer your questions and protect your interests.
Without the assistance of a lawyer, you may be unaware of all of the potential risks associated with purchasing a pre-construction condo. So, be sure to consult a real estate lawyer before making any decisions.
4. Underestimating the closing expenses
When purchasing a pre-construction condo, it is critical to be aware of all potential costs associated with the transaction.
Many first-time home buyers make the mistake of underestimating closing costs, which can quickly add up. These include land transfer taxes, legal fees, development fees, HST, and other costs.
When the builder hands over the title to you, registration takes place. This is also when the closing costs must be paid.
It is critical to work with a good real estate broker to negotiate the closing cost cap. When an investor closes, they must pay HST as well as all registration fees.
5. Falling in love with the model suite
When looking for a pre-construction condo in Toronto, it’s easy to see why so many people fall in love with the model suite. The models are almost always professionally decorated, and they frequently include high-end finishes and fixtures not found in the actual units.
However, keep in mind that the model suites are intended to sell condos, not to provide buyers with an accurate representation of what they will receive.
For starters, the model suite is frequently much larger than the average unit, which gives buyers a false sense of space. Furthermore, the model suite is typically decorated with high-end finishes and furniture, making the units appear more luxurious than they are.
When looking at pre-construction condos, keep these things in mind to avoid falling in love with the wrong unit.
6. Trusting the floor plan
You’re putting money into much more than just four walls and a roof. You are also investing in the promise of a particular way of life.
One of the most important aspects of this promise is the floor plan. It’s a plan for how you’ll live in your new house. Nonetheless, many buyers make the mistake of believing that the floor plan they are shown is final.
The truth is that things can and do change during the building process. Floor plans can be changed to make better use of available space or to meet the needs of the builder.
As a result, when reviewing floor plans, it is critical to be adaptable. Keep in mind that the final product may differ slightly from what you initially saw.
Unfortunately, many buyers base their new home purchases solely on brochures or artist renderings. In fact, the builder has the authority to change any image, floor plan, or layout at any time.
7. Failing to review the contract legally
The purchase agreement is a legally binding contract that specifies what you will receive and the terms of the transaction. One of the most common errors is failing to legally review the contract.
Before you sign anything, you should have a lawyer review the agreement to ensure that you understand all of the terms and conditions. Otherwise, you may be putting yourself in financial jeopardy in the future.
The contract contains a lot of legal jargon that can be difficult to understand, and it’s easy to overlook something important. A lawyer can provide advice and identify any red flags.
After the contract is signed, there is a 10-day cooling-off period. During this time, you may cancel the transaction without penalty.
Make the most of this time by having your lawyer thoroughly review the contract before making a final decision.
It is critical to be aware of the various mistakes that can be made when purchasing a pre-construction condo in Toronto. Buyers can make mistakes such as underestimating closing costs, falling in love with the model suite, and trusting the floor plan. It is also critical to review the contract legally before signing anything and to use the cooling-off period. You can help to ensure a smooth and successful transaction by avoiding these blunders.
Contact our experts for personalized advise and real estate investment planning. Call 416-878-0749 or Register here.