The Toronto real estate market is always evolving, and as a potential homebuyer, it can be challenging to decide which type of condo to invest in. While resale properties offer established communities and a record of previous sales, pre-construction condos promise the latest in modern design and technology, often stellar locations, and many other benefits. In this blog, we’ll explore the pros and cons of each option to help you decide which type of condo is the right investment for you.
Pre-construction condos are properties that are still in the planning and construction phase, as the name suggests. These units offer buyers the opportunity to enter the real estate market at a more gradual pace, as the buyer typically pays a deposit of 5-15% over a period of time, with the remaining down payment due at the completion date, which is typically about 2-5 years later.
Pre-construction condos usually feature the latest advancements in modern design and technology, making them appealing to prospective buyers or renters. Furthermore, these condos are usually situated in emerging neighbourhoods, which can lead to higher appreciation potential over time as the area becomes more desirable. Many condos are also built in prime locations, however, to help intensify cities.
Investing in a pre-construction condo has several significant advantages. Firstly, buyers can secure the property at the lowest price without having to participate in bidding wars. Additionally, buyers can customize the unit according to their preferences, such as choosing the appliances, finishes, and layout that best serve their needs. Furthermore, pre-construction condos come with warranties, which can provide reassurance in case of any unforeseen issues.
Despite their benefits, pre-construction condos present their own set of challenges. One potential challenge is the risk of construction delays, which can affect your ability to move in, generate rental income, or sell the unit. Since pre-construction condos require time to build, you must have a good understanding of what your future might look like in a few years. For example, how much space will you need? Are you planning to expand your family? Additionally, since pre-construction condos are not yet constructed, you cannot inspect the unit before purchasing, which can be a disadvantage for those who prefer to see the space before making a decision.
Resale properties are homes that have been previously owned and are now being sold by their current owner. These condos are typically located in established communities, offering a sense of stability and history. Resale properties are oftentimes larger than pre-construction condos, offering more space for families or those looking for a little extra room.
One of the primary advantages of investing in a resale is the ability to see the property before you buy. This means that you can inspect the home for any potential issues and get a feel for the space and layout. You can also research the property’s history, including previous sales and any issues that may have arisen.
Another benefit of investing in a resale property is the ability to move in right away and the potential for immediate rental income. Since these units are already built and ready to occupy, you can start renting them out right away. This can help you earn a return on your investment more quickly than waiting for a pre-construction unit to be completed.
Despite their benefits, resale homes present their own unique challenges. One of the main concerns is the age of the property, which may require more frequent maintenance and repairs. Additionally, since these properties have already been owned, they are not as customizable and may not feature the latest advancements in modern design and technology. This can have an impact on the property’s appeal to potential tenants or buyers. Furthermore, purchasing a resale property typically requires a significant amount of money upfront, as the down payment is usually around 20% of the property’s value.
Which Type of Condo Should You Invest In?
When choosing which type of condo to invest in, it’s crucial to consider your objectives, preferences, and financial position. If you want immediate rental income, quick occupancy, or a sense of community, a resale property may be the better option. However, if you’re searching for a new unit that you can tailor to your liking and the potential for appreciation over time, a pre-construction condo might be more suitable. You must also assess your finances and determine which option is most suitable for you. Can you afford a down payment of 20% or more right now, or do you need some time to make your payments?
Additionally, the location of the unit is critical to consider since it can influence its appeal and potential for rental income and appreciation over time. Seek out units situated in sought-after neighbourhoods with convenient access to public transit, shopping, and entertainment options.
Ultimately, the decision of whether to invest in a resale or pre-construction condo comes down to your personal goals and preferences. Do your research, weigh the pros and cons of each option, and make an informed decision that aligns with your investment strategy.