Will my condo be ready on time?
Consult with your pre-construction.ca agent to ensure you’re buying from a reputable builder with a solid track record.
Delays can be caused by inconveniences that are beyond the builder’s control (such as labour strikes or poor weather conditions), but top-rated condo builders will always make it their mission to stick to the development timeline as closely as possible.
Will my deposit be protected?
A typical deposit for a pre-construction condo suite for a Canadian buying from a builder is 20% of the purchase price. Your deposit is fully protected by the Condominium Act.
When buying a pre-construction condo from a reputable developer, your purchase fees will include a Tarion Warranty Corporation enrollment fee that provides deposit protection of up to a maximum of $20,000. This way, in the unlikely event that the condo project is not completed, the financial loss will be less significant.
Which Exposure Is the Best for Resale?
Unobstructed south-facing views often make a great option for resale. Anywhere you can see the waterfront, the CN Tower or the downtown skyline will be extremely popular with buyers.
The Pre-Construction Sales Stages:
Toronto pre-construction real estate is sold in the following stages:
- FIRST release is to friends, family and business associates of the developers.
- SECOND release is to Platinum Realtors.
- THIRD release is to VIP Realtors.
- FOURTH release is to the developer’s registrants list
- FIFTH release is to public and general Realtors
What Are The Closing Costs?
Buying pre-construction real estate has some additional expenses you should budget for. The amounts will vary depending on purchase price.
- Land transfer tax
- Legal fees
- Development charges and educational levy
- Tarion warranty enrolment fee
- Builder adjustment fees
How Long Should I Wait Before Selling My Pre-Construction Real Estate?
Every purchaser has their own strategy and goals when investing in real estate but they all fall into one of three categories:
- Short-term investor: Will sell before final closing or shortly thereafter. Does not want to be a landlord and is looking for appreciation on the deposits above what the bank offers.
- Medium-term investor: Will rent the property for a few years before selling it for a profit. Allows you to get a higher return. Renter will pay down mortgage. Most investors fall within this category.
- Long-term investor: Will rent the property indefinitely with no plans to sell. A way of building wealth and cash-flow over the long term. Real estate being paid off by tenants, steady increase in value over time.
Deposits: 20% is average, but there is flexibility on the deposit structure
One of the reasons why investors choose pre-construction condos is the deposit structure. They can put down 20% of the value of the condo, but they earn appreciation on 100% of the value of the home for the next 3-5 years. They also don’t have to worry about taxes, maintenance, mortgage payments, insurance, and tenants.
The deposits are generally staggered over a period of a year, but every project is different.
A general deposit structure will be:
- 5% at signing, which is cashed as soon as the conditional period in the offer expires.
- 5% within 30 days
- 5% within 60 or 90 days
- and, 5% either within 120/240/365 or on occupancy.