Lets talk about pre-construction projects, and just some of the things you have to look out for when you’re going to a sale center, with or without a real estate agent, so there are tons of pre-construction projects occurring around the GTA, and the city is really growing right now and pre-construction condos can be very lucrative for the investor.
Should you buy a pre construction projects? but before that, lets talk about what is pre-construction projects? Essentially, it’s just buying a unit in a condominium building or a house on a lot that hasn’t been built yet. And normally you go through sale centers, by the developer or the builder itself in order to purchase these lots and these buildings. So really it’s just pretty much retail shopping, they set a price on the project, you go in, you pick the floor plan that you want. You pick the lot that you want if it’s a free hold detached, and they build it for you pretty much you go to some decor centers, you get to pick out your tiles, your stairs, your hardwood your appliances, you get to pick pretty much everything so that’s what the fun part about pre-construction is, that you get to make it your own pretty much like you’re building your own home.
One thing that you have to keep in mind when purchasing a pre-construction condo is the maintenance fees, so they’ll normally tell you an estimated price per square foot of what you’ll be paying in maintenance fees, sometimes if a project sat for a little bit or if realtors have Platinum access definitely contact a realtor like me to see if you can get some incentives, certain incentives can be $10,000 off parking one free assignment. If you don’t know what assignments are, make sure you check out my condo assignment post. And you also get a couple of other incentives depending on what the projects are and the timeline that they’re in their building process.
So when you go to a sale center and you find the floor plan you like you find the elevation you like you sign the builders contract so you don’t have to write your own you’re pretty much agreeing to everything that they have written. And the great thing about this contract is you can take it to your lawyer, have them review it, make sure that it’s all okay, etc. But you also get a 10 day cooling off period, that you don’t normally get in resale homes, so as soon as you sign that piece of paper, you’re going to have the timeline ticking you have 10 days to still think about it and go from there. So when you go to the sales centers, you’re gonna have to bring your checkbook sin number, bring your real estate agents, as they can walk you through kind of what the project looks like and all the amenities and the future value, etc.
things to know before buying a pre-construction condo
Also you’re going to need to bring a mortgage pre-approval letter as well. Specially from one of the big five banks. Again, these things all change depending on the developer so contact your realtor and talk to them, but they’re going to want to know how much you can afford and that you can afford the unit that you’re purchasing one thing to keep an eye on when you’re purchasing a pre-build is that there’s going to be some closing costs that are going to be passed down from the developer to yourself, so you can estimate about 2% of the purchase price of the unit that you’re buying as what you have to pay for closing costs so certain closing costs can be Development Charges and levies which hopefully your lawyer is going to cap for you so that you’re not charged a whole lot at the end. Land transfer tax, obviously, utility fees education fees, etc. So a lot of these get passed down to yourself as a consumer and last but not least something that you have to keep in mind when buying a pre-construction project is that taxes are not going to be assessed, from the day that you occupy the project. So you’re going to be a little bit behind in the tax assessment. So you’re going to get a huge bill for taxes at the end of year one from the municipality. So definitely budget for that so that you’re not scrambling to pay the municipal taxes at the end.