Want to invest in pre-con? 5 things to keep in mind

Thinking about investing in a pre-construction condo? Despite higher prices per square foot, putting your money into a pre-con unit can net some great returns. But not all developments are created equal: you’ll see greater appreciation and better value if you focus on these 5 things:

1. Location. Being close to a transit line or downtown core makes a property worth more. But one thing to consider: it doesn't have to be an existing line. Buying something on a planned subway or LRT route is a great option as well.

2. Builder reputation. The last thing you want is for a builder to bail before a project has been completed. You may get your deposit back, but in 3 or 4 years, that money won’t buy as much, and you’ll have lost whatever appreciation you would have built in that time. You want a builder with a stellar rep, with lots of completed projects and a proven track record.

3. The right to assign (sell your unit before the building is complete). Life can change over 3-4 years, so you want to buy into a project with good investor incentives – ones that build in flexibility should you need to sell or want to make a profit. Selling before the project closes allows you to take advantage of any appreciation, without having to pay closing costs and taxes. Plus, even if you’re not planning to sell the unit, life can change. In 3 or 4 years, you could be in a different situation, and it’s good to have an exit strategy in case you need it.

   Read more: Is pre-construction still a good investment?

4. The right to rent during occupancy. The occupancy period is the time between being able to live in a unit and actually owning it. It’s when you’ll be paying the equivalent of your mortgage payments every month, without it actually going towards your mortgage. You want to be able to rent it to a tenant during that time so your costs are covered, but not every builder will let you do that. (A good agent will negotiate that incentive for you, or steer you to a project that allows it.)

5. Caps on closing costs. The city will charge the builder tax once construction is completed. But nobody knows what that tax will add up to 3-4 years from now. So you want to make sure those costs are capped in case they go up, because otherwise, any increases will be passed down to you.

Looking to invest in a pre-construction project in the GTA? I have VIP access to a number of high-demand developments in the city, with pre-negotiated investor incentives and other perks. Get in touch to find out more!