Are Pre-Construction Condos in Toronto a Good Investment?

January 24th, 2022

When you’re considering purchasing a condo as a homebuyer or investor, there are many potential prospects and benefits, however deciding whether to buy a pre-construction condo or a resale condo is where things get a bit more complicated. Investing in condos is a great way to get into the real estate market and build personal equity, and fortunately, experts are predicting 2022 to be the year of the condo due to rising home prices and shortages. Rest assured, the condo market is thriving in the GTA, and you can get into the market with a great purchase if you do your due diligence. So, now that you’ve decided to invest in a condo, which route should you go? Should you invest in a resale condo, or are pre-construction condos in Toronto a good investment?

Resale condos are a good idea if you’re looking to move in right away. Pre-construction condos, however, are just that – condos that haven’t been constructed yet. So when investing in a pre-construction condo, you could end up waiting for years for your condo to be built and it’s possible to face delays. Your personal plans could also change during this time. One of the major benefits of purchasing a resale condo in Toronto is that you can move in just days or weeks after you purchase your new home. Another benefit is that you have the ability to actually see the condo before purchasing, so you know exactly what you’re getting.

So what about purchasing a pre-construction condo in Toronto instead – why would you want to do that if it means waiting and not getting to see what you’re buying? Well, purchasing a pre-construction condo is the best way to grow your money, and it also gives you the thrill of getting to personalize your new home to suit your style – not to mention the delight of having a brand new home that no one has ever lived in before.

When you invest in a pre-construction condo, the value increases the moment you purchase, and it continues to appreciate until the day you move in and then eventually sell. Most people prefer to buy new, so from an investment perspective the value of your pre-construction condo will increase more than that of a resale condo, which could end up costing you more in costly repairs and renovations.

When purchasing a pre-construction condo, you’re essentially purchasing a condo that’s unseen, so you want to invest in a reputable builder. Although it can be a bit daunting to invest in something you can’t see, there are great advantages. When you invest in a pre-construction condo you get the lowest price possible. Builders and developers are looking to sell units efficiently to fund construction, so you get incredible value. You can avoid the stress of costly bidding wars. You also get the first appreciation, and if you invest in an up-and-coming neighbourhood, you can see the value on your return increase immediately.

For many homeowners, one of the major benefits of purchasing a pre-construction condo is that you get more options to customize your space according to your wishes and needs as well as your personal style. You can choose units based on a first-come-first-served basis, and you can select the floor plan, layout and view that suit your lifestyle. When investing in a resale condo, you buy the condo as is and whatever changes you want to make will come at an extra cost.

Another thing to consider when choosing to purchase a resale condo versus a pre-construction condo are the fees needed upfront at the time of purchase. In a resale condo, you will need to put down a down payment and acquire a mortgage from the bank, which you would pay over a term, typically 25 years. The advantage of investing in a pre-construction condo is that you don’t have to pay your down payment all at once. You pay it off in stages over the first year, giving you more time, flexibility and control over your finances. Also, if you’re looking to invest in a property to rent out to tenants, if you decide to purchase a resale condo you will need to find tenants immediately to take over your mortgage whereas with a pre-construction condo, you have time to sort out your affairs.

The biggest advantages of investing in a resale or pre-construction condo is that both options are a great investment opportunity, and the value of your condo will continue to increase until you are ready to sell. This is especially true in Toronto right now as the demand for housing and real estate development is continuing to favour upward and vertical expansion.

The main question you want to keep in mind is when you’re looking to occupy the unit. If you’re looking to move in immediately, then resale is the way to go, but it’s important to note the benefits of a pre-construction condo. Pre-construction condos allow you to break into the real estate market at a slower pace, demand less money upfront, and give you the best appreciation value and the most options when it comes to customizing and designing the space based on your needs and personal style. Pre-construction condos also offer better rental and resale value than resale condos, because people would typically rather live in a new build rather than invest in properties that need maintenance or extensive renovations, or that have outdated features and finishes. So, are pre-construction condos in Toronto a good investment? Absolutely.

Are you considering investing in a pre-construction condo? Do you have questions about the difference between resale and pre-construction condos? Connect with BAZIS on social media (Facebook, Twitter or Instagram) and let us know!