What is the secret that so many condo investors are successful and reap profits?  

Real estate is not exactly fool-proof and I agree that you have to be careful in where you invest. After all location is the key. But there are also some other equally important matters to be considered. It helps to know what risks are involved and what steps you can take to reduce these risks.  


Let us walk through nine useful tips that will help in ensuring you get your pre-construction condo investment right. 
 

1. Do your Research and Educate yourself on the Market.

Research real estate trends and all the factors that could affect your investment. It’s also a good idea to see what future trends are out there. Are there any reliable forecasts you can use for mortgage and rental rates, resale value, etc.? These can help you determine your risk and develop a contingency plan for it.
Make sure you keep yourself updated on any laws or regulations which could affect your real estate investment. Are there any risks that may pose a challenge to your condo’s potential to earn income? You need to know about the processes involved, if any laws or regulations are broken or ignored, especially when it comes to paying property taxes, renting or selling your condo. Even if you are a savvy investor, having good advisors in these areas will go a long way.
 

2. Draw up an Investment Plan

You are an investor and the property you buy is an investment whether you want to live in that property or rent.  If you’re a first-time home buyer, you need to know what your investment goals are. Have an honest conversation with yourself as you develop your investment plan. Ask yourself the following questions:

• Will it be primarily for personal use, rental or resale? 
• How long do you intend to keep the property before selling it?
• What type of savings and investments do you need to make it happen?
• Will you be tapping into loans, cash, RRSP or a rainy-day fund that you have tucked away? 
• What is the return you are expecting on your investment?
• Create a timeframe in which you want your investment to happen
• Take an honest look at your current financial standing. How does it look when time comes to close your pre-construction purchase? If circumstances change by that time then you can fall back on assigning your condo, if your purchase agreement allows. This is a whole different topic which is covered by my blog on condo assignment.

3. Select a Popular Location

Location. Location. Location. That is an overly used phrase. But think about it. Buying a condo in a well-situated location with easy access to public transportation, in a high density population area or an area strongly predicted to become high density is important. Simply buying into real estate doesn’t automatically mean the property price will go up. In fact, if you invest in the wrong location, your investment can significantly reduce in value when the economy turns.
 

4. Invest in a reputable builder.

Learn more about the builder’s past record – how long they are in business, how reputable they are, what is their track record in finishing condo projects, do they finish on time? Knowing these things are of great importance. After all you are going to give your precious money to them.
 

5. Don’t Worry about Parking

Rather than focusing on whether parking would be available in a building, my recommendation would be to focus on condo projects close to public transportation. Many people seek out areas with easy access to public transportation. When seeking tenants for rental income, this proximity to public transportation is an important consideration.
 

6. Wait at Least 1 Year Before Selling

For your rental unit, hold on to it for at least a year after closing. Rent out your unit to cover your mortgage payments while your property quietly appreciates.  Besides this, there are also some important tax considerations behind keeping the property for a minimum one year. Talk to your tax consultants about them for more information.
 

7. Do Not Pay for Unnecessary Upgrades

If you are buying an investment condo unit primarily for rental income, I suggest not to make upgrades that are not needed. Any upgrades you make will increase your purchase cost. But it may not necessarily fetch more rent. Also when time comes to sell your unit after a few years the selling price usually blend with other units which means you may not get more price for the upgrades.
 

8. You Can SOMETIMES Negotiate the Deposit Structure

Find out if your builder can extend your deposit payment schedule. You may be able to negotiate it if you want some payments to be made later. When you buy a pre-construction condo, you will incur additional closing costs like the TARION Warranty fee, assignment fees (if you decide to sell before the final closing) and utility hook-up fees. Many of these closing costs can be capped at a maximum amount. This is why it’s so important to work with a realtor who is experienced in pre-construction projects. They will make sure you are getting the best deal.
 

9. Work with a Platinum VIP Agent 

Always choose to work with a Platinum VIP agent in the early stages of a condo project. You could literally save thousands of dollars! Purchasing a pre-construction is not as easy as it may seem.  Many pre-construction condo projects go through unstable sales and a marketing process where prices may increase and the availability may decrease at each stage of the process. These platinum VIP agents can make sure you pay the lowest possible price and get the best possible unit as early as possible. They can help you navigate which builders to avoid, which condo finishes to select and what to be on the lookout for in your contract so you avoid expensive mistakes.

This knowledge can help you navigate the complex pre-construction process to get you the property you want and the return on investment you need.

If you need help in purchasing a  pre-construction home, I can help you. Call me at 647-834-9928 or email at [email protected] or visit one of our latest pre-construction projects on our webpage.