Are you looking to make some smart and affordable investments in Toronto’s real estate market? You are not alone. North Americas fastest growing condominium market has seen a massive surge in sales during the last several years and carries on to be one of the most opportunistic real estate investing markets available today. Although the growth of Toronto’s real estate market value has slowed down recently, it is not too late for investors to make a sizeable return on their investments.
WHO THIS INVESTMENT TYPE IS FOR
When most people think of investing in real estate they typically think of flipping or rebuilding homes. Flipping a house is the act of renovating an outdated property with the goal of reselling for a much higher price. This is a popular concept in Toronto that can be very profitable, but the biggest issue is the amount of capital needed to start and finish such a project. Not only do you have to be able to afford the down payment and mortgage payments for the home, but you will also have to self-fund or raise capital for the renovation costs. For most people, this is not a realistic option, and they must look at other avenues for making their investments.
WHAT ARE PRE-CONSTRUCTION CONDOS
The real estate market that requires the least amount of upfront capital is pre-construction. Pre-construction condominiums are real estate projects set up by the developers to raise capital and funding for the development of a particular building. Potential buyers are typically shown a true to size model or showroom of what the apartment layout and style will be. The buyers will also be able to personalize the finishes of their selected units to make them more unique. The most significant benefit is that most developers only require a 5% downpayment upfront to secure a unit. This makes pre-construction condos an affordable and realistic option for most people.
THE RISKS OF PRE-CONSTRUCTION CONDOS
Like most things in life, there are some very important risks to consider when investing in pre-construction condos. As the name implies, you are investing in a project that is not even started yet. This means that you are putting all your faith in the developer’s ability to deliver on their promises. Construction is a process that has many variables involved with it. From unexpected problems such as weather issues, permit issues, funding issues, management issues and so on, there are many problems that can slow down the progress of the devlopement. Another risk is that not everything will end up looking exactly how it is sold to you. Things such as the quality of construction, the view and the size of the unit might look quite different when they are completed from what you imagined.
NEED HELP FINDING YOUR NEXT INVESTMENT?
Making a real estate investment of any size is a life-changing decision that has to be taken seriously. The best thing you can do is seek the help and guidance of a local expert that knows everything there is to know about the current real estate market. Andrew Shevtsov and his team are here to answer all of your questions when it comes to investing in pre-construction projects in Toronto. Please feel free to send us a message or call Andrew directly by visiting the contact page.