Pre-Construction buying process
1) Reach out to an agent
Once you’ve decided that investing in a brand new unit is the right choice for you, it’s time to get started! Reach out to an agent with expertise in the pre-construction market. They’ll get the ball rolling by discussing your needs and locating suitable options to meet them.
2) Look at floor plans
When you find the right development, your agent will help you find the best available floor plans. They’ll look at factors such as square footage and potential profitability, then align them with your preferences.
3) Sign your agreement
Once you’ve found the ideal future unit, it’s time to sign your agreement and seal the deal! Be sure that you have all the necessary personal documents with you at the time of signing.
4) The cooling-off period
After signing the purchase agreement, pre-construction buyers are given 10 days to carefully consider their purchase. This cooling off period provides you with the opportunity to review everything and back out of the deal if needed. During this time, it’s a good idea to get your legal representative to review your agreement and ensure that all of your ducks are in a row.
5) Get pre-approval
Obtaining pre-approval for mortgage financing is an important step toward condo ownership. Since your pre-con development won’t be registered yet, this process will be different than it would be if you were opting for a resale unit. Your agent can help you understand the steps involved—and recommend a great lender.
6) The first cheque cashed
Your first cheque will be cashed immediately after the cooling-off period ends. For all subsequent payments, it’s important to ensure that you have the required sum in your bank account. Consult the dates in your purchase agreement as a reminder.
7) Start customizing
Around one year before your unit is completed, your developer will get in touch with you regarding your design preferences. This is your chance to choose the finishes that match your tastes!
8) Interim occupancy
The time between when your unit is completed and the date when you officially take ownership is known as the interim occupancy period. You can rent out your unit during this time if the developer allows you to do so, and you’ll also start paying monthly fees. It’s important to note that this period is often shorter than investors expect—in some cases, the interim occupancy and registration date can be on the same day.
9) Take ownership
Your building can be officially registered once it passes all necessary inspections. You’ll be notified once registration has taken place, which usually happens around 4-9 months after your interim occupancy period begins. Your mortgage will take effect, and you’ll also need to take care of all remaining closing costs.
10) Renting out your unit
If you didn’t start renting your unit to a tenant during your interim occupancy period, now is the time to do it. An agent with investing expertise can help you find a great renter, and offer you advice to kick off your tenure as a landlord.
On the whole, purchasing pre-construction can be a great option for seasoned investors and first-timers alike. Of course, there are some risks involved. Working with the wrong developer can lead to long delays and even project cancellations. While you’ll get your deposit back if your development is canceled, there’s a possibility that the market will have changed significantly during the time that you were waiting for your unit to be completed. Unfortunately, you could be priced out of the market as a result.