Things to consider before buying pre-construction.
A significant amount of time will pass between the day you purchase your unit and the date on which you take possession. You can expect to wait several years (typically 3-4) until your condo is completed, and there’s a good chance that you’ll also encounter delays. In other words: before you make a purchase, think carefully about where you’ll be a few years down the road.
If you need to sell your unit due to a major life change, you have the option of doing so on assignment (if the developer allows it). Put simply, this process entails selling the deed to your property before your condo has been completed.
Maintenance fees for brand new units typically start out lower than those you’d pay on a resale condo. That said, there’s a good chance that they’ll rise during your first two years of ownership (though this isn’t always the case).
The deposit structure
Deposits on pre-construction units generally range from 15-20 percent, though that number could be set as low as 5 percent as an incentive. While it varies from one development to the next, here’s what your payment structure could look like:
• A set amount at signing—anywhere from $3,000 to $20,000+ • The remainder of 5 percent, to be paid within 30 days • An additional 5 percent, due somewhere between the 90-120 day mark • Another 5 percent between 270-365 days after signing • The final 5 percent on the interim occupancy date
Condo buyers must pay HST on new units. Fortunately, you can receive a full or partial rebate in most cases. The rules and requirements differ depending on whether you (or one of your immediate relatives) will be the end user of your unit, or whether you’ll be renting it out. Be sure you get all of the facts before making a purchase by talking to your lawyer and accountant.
First access or remaining inventory?
Getting early access to a new development can sometimes have big benefits, such as lower price, developer incentives and more choice when it comes to floor plans. That said, many investors are surprised to learn that remaining inventory can also come with some major advantages. Examples include an extended deposit period, cash back on final closing, waived assignment fees, or free parking.
To get the most out of your purchase—whether you make it in the earliest stages of development or later on—work with an agent who knows the pre-construction landscape and can work well with developers.
Many modern high-rise condo buildings offer spectacular views, which can be a major selling point for buyers. That said, the unit you choose should have more to offer than a stunning vista. Unless a unit is directly facing the lake or a park, your view could be obstructed by a future development—something to keep in mind during the selection process.