There’s a hot new building going up in a neighbourhood you’ve always loved – and it looks like it’s going to be the perfect place to put down roots or buy yourself an investment property. But before you jump into that glorious modern design with both feet, it’s good to know the pros and cons, learn about the process – and get a sense of how long it may be before you’re able to live in that sweet sunlit space.
PRO: You have control over design. The biggest bonus to buying pre-construction? You pick all your finishes and choose a layout and view you like.
PRO: You can get into a great neighbourhood. Buying in a new project is often the only way to get into high-demand areas like Yonge and Eglinton or the Canary District – places where there simply isn’t much resale stock to be had.
CON: It’s not cheaper than resale. If you’re looking for a deal, you won’t find it in pre-construction. It used to be like that – after all, if you were paying up front, taking on risks and waiting years for it to be finished, you should pay less than someone who can just move right in. But builders noticed people were buying early, then flipping units for huge profits. These days, they’re basing prices on how much the unit could be worth when it’s finished, not what a comparable unit is worth now.
CON: You don’t have much control. It can be years before you can move in, with potential delays slowing things down even more. Plus you could be moving into an unfinished building, with amenities that won’t be ready to use for months.
CON: Occupancy fees. There are two closings: the interim, which is when you can move in, and the final closing, which is where ownership is transferred to you. If the building isn’t registered, you can’t own your unit – and you’ll have to pay an occupancy fee that doesn’t go toward your mortgage. The occupancy period can drag on, so it’s important to buy from a reputable builder.
CON: It’s easy to buy blindly. There was a recent project in Vaughan that had 1000 units – and 5000 informal offers. The best units in popular projects sell out fast. And in the rush to get their hands on a unit, buyers aren’t taking the time to make informed decisions.
CON: You have to know the right people to get the good units. Once a project is released to the public, the best units have already been sold – to friends or family of the builder, or to realtors with priority access. Working with an agent can help. If we have a client who wants a specific unit in a certain project, we can connect them with someone who can make that happen.
TIP: Don’t worry about paying a premium for a higher floor. In most buildings, the higher your unit, the more it costs, so people who want to save money will buy on a lower floor. But remember: builders move people in from the ground up, so the lower the floor, the longer your occupancy period – and the more you will pay in addition to your mortgage. So that pricier unit on the 22nd floor? It may not be as expensive as you think.
Buying a condo is a balancing act. To get into that hot new building with the sexy modern design, you might have to wait – and maybe spend more than you anticipated. But if you’re willing to take the bad with the good, you could end up with an incredible space in an amazing neighbourhood!
***Next up: Resale – is it right for you?***
