Why Pre Construction Condo Investment Is So Harder Than Regular Buying
The good news is that pre construction condos make for an extremely sound investment decision whether for long term investment or just to live in. But just owning a pre construction condo doesn't make you any cash, and in reality, it may become a huge liability as soon as the builder doesn't finish and sells the units for profit. The most prudent pre construction buyers are those who choose a brand new building as a down payment and rent it out while it's under construction. This offers excellent leverage when pricing for the condo will be lower than a finished unit. The downside is that pre construction condos require far more work and expense than finished units, but there's no way to tell until you get there. This article will help you get best pre construction condos toronto.
I've seen many people overpay thousands of dollars in costs for a condo that, in all likelihood, they could have gotten in at full price with a little patience and knowledge. My advice? If you're planning on investing in pre construction units, take the time to check out your local real estate agents and board of sales before you buy. Most importantly, find out about the 10 day cooling-off period that all pre-construction condos have. Check out this post that has expounded on the topic: https://www.encyclopedia.com/social-sciences-and-law/sociology-and-social-reform/sociology-general-terms-and-concepts/home.
I'm sure you've seen movies where developers only allow a few days to go by after closing for the lease/purchase of their new units. While this sounds like a great idea on paper, it often doesn't pan out the way the filmmakers planned. In my experience, most condos do end up on the market much later than the originally stated closing date because of the inevitable issues that arise once the condo is officially taken possession of (e.g. unexpected problems with the plumbing).
For example, one of my favorite scenes from the movies "E.T." has the father of the bride getting out of the car in front of everybody yelling, "What are you doing?! We want our money back!" This scene plays out exactly why it's so important to keep in touch with your real estate agent even after the closing on pre construction condos. It's not uncommon for investors to end up with significant repair bills when they try to rush into final closing and don't have their finger on the pulse of their building's situation until the very last minute.
I've seen countless examples of people trying to rush into final closing and pay unanticipated final closing costs by shoving the builder's association fees (the fees that cover things like pest control, HVAC, HOA fees, etc.) upfront along with the purchase agreement without first negotiating a fair and equitable new lease/purchase option with the builder. Worst case scenario, if the new lease/purchase option doesn't work out, the investor often ends up owing the builder money because the new lease/purchase agreement stipulates that the new owner is responsible for all of the builder's late work costs after the end of the term of the lease/purchase. Unfortunately, these sorts of scenarios often result in an investor owing tens of thousands of dollars to their builder. Learn more about getting the best real estate agents toronto.
Other investors also fall victim to unanticipated closing costs because they attempt to "assign" the pre-sale buyer to the closing costs of the project instead of working out a new purchase agreement. I've seen many pre-construction investors try to assign the buyer to the builder's closing costs or even worse, their own financing. Here's where the problems often occur: the buyer doesn't have enough money to finance the project, the seller isn't going to provide financing or provide a loan, or the seller isn't interested in financing. In the latter two situations, there are several options available to avoid a bad closing. One option is to negotiate a payoff amount with the seller to ensure that she'll close on time and the buyer gets his money. Another option is to provide pre-sale assistance to the seller so she has minimal late-payment stress and can close on time.