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Pre-Construction Condo Toronto

Pre-Construction Condo Toronto

 

I want to buy a pre-construction condo in Toronto where I can get a great return on my investment? 

 

I know it will take 3-5 years for the place to be built. 

 

Is this something I should consider?

 

Answers

By Swift Sells Toronto

This is a great question for many home buyers and investors alike.  Five to 10 years ago, this was an easy answer, “If you can let you money sit for that period of time, then Yes go of it”.

 

In this age, the chance of getting double digit returns for the average buyer/investor just when the building is finished, are slim to none.

 

Two current example will support this.  In the mid-town area (Yonge and Eglinton), two projects were registered in the last 6 month:  The Berwick (Berwick and Duplex) and The Neon (up the street at Orchard and Duplex.  Both were big pre-sale condos.  In a recent transaction at the Berwick, the seller had indicated that the “sales representative” of the building, at the time of purchase, indicated that he’d be able to 500K when the building was registered (this happened in October 2015).  An offer was provided that, “barely covered the costs” of the condo, parking, storage and commission.  Several units like this have been for sale in the building with a recent sale being more then 35K under the asking value of the unit in question.

 

Investors are getting pissed off when they realize that they made a “bad choice”.  It is important to look at investments as a long term payback vs a “get rich quick scheme”.  They no longer are.

 

The other example is at the Neon. Units under 500 sq ft, (registered at 405 sq ft) were asking close to $1000 per sq ft resale.  When exploring current listing in the is building, there appear to be over 30 units of this size for rent.  Very few, if any units in mid-town can command this price per square foot (PSF).  Even in Yorkville, some of the penthouse units are only listed in the low $900’s PSF.

 

My caution is to be aware that:

 

1) your money (usually 25% of costs) is going to be tied up for the length of time it takes to complete the building for occupancy,

 

2) if you expect to “make a killing in the pre-construction market” think again,

 

3) do your due diligence before purchasing a pre-construction unit and 4) ALWAYS have a qualified and specialized real estate attorney review your documents during your cooling off period to avoid money and costs surprises at closing.

 

For more information on investment and pre-construction purchasing, feel free to contact me.

5 comments
Level 3 (XP: 950)
last year
lovely picture. great vision for that place.
Level 4 (XP: 1450)
last year
very nice!
Level 4 (XP: 1150)
Nice! So Informative, thanks for the info Tim!
Level 1 (XP: 0)
Ms. Campbell: You are correct about "many other fees". This is why there is a 10 day (actual days vs business days) cooling off period when buying a new build. This gives your real estate attorney a thorough opportunity to review all the builder's documentation, fee schedules and add ons. Your attorney can help negotiate "caps" on these additional expenses and create contract amendments to help assure against any surprises at closing - which is often several years down the road. They will also review all deposits schedules as that can vary from project to project and builder to builder.

To get more information on this, feel free to contact your real estate attorney or look under the preferred partner tab on my home page for an attorney that I work with on a regular basis. Thanks again for you comment.
Level 11 (XP: 5350)
Pre construction condos seem like the way to go and this is what I was looking to do some time in the future...but there are so many other fees involved!

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