There are new condo buildings going up all the time in Toronto and the surrounding area and many of them advertise that more than half of the units are sold before a single wall goes up. Whether you're looking at Toronto real estate or a property in the downtown core there are many advantages to buying a pre-construction condo. But there are risks as well and you need to know what you're getting into before you sign the final papers with the developers. Here are some of the main pros and cons when it comes to buying your next home before it's even built.
Condos are the newest modern real estate craze; so those that are looking to live in them are usually want all the latest things in their unit. Well, you'll certainly get that when buying a pre-construction. When you are looking at the plans for a building yet to be created you will usually now find lots of windows providing natural light, open floor plans and large kitchens. These are things you might not see in your current condo rental or single-family home.
If you are looking for a deal with your condo purchase and don't have a solid move-in date in mind, than a pre-construction property could be just for you. Developers need to sell at least half to as many as ninety percent of the units in the building before starting the project in order to secure their building loan. So, they offer properties at a discount to the first buyers as an incentive to get those homes sold as soon as possible. When compared to a comparable just finished condo, you might be saving as much as one quarter of the price.
When considering a pre-construction property there is usually the possibility of a better appreciation value than with a typical condo. Sometimes condos can even be bought and sold for escalating prices in the most-anticipated complexes before the building can be completed. Even with luxury condos, you will usually not find the same appreciation in the first couple of years that you will get when comparing to your purchased pre-construction price. In fact, most units depreciate in value after the first five years.
There are some potential downsides to buying a home that is not yet completed, however. While some condos can go up in as little as three months others can take years to be completed. If you need to get into your home by a certain date than this could be a problem. You are also not guaranteed what exactly will be inside your unit. They could change the plans on the kitchen decor, your bedroom size or could even never finish the building.