Let’s help find a remarkable pre-construction project for you!
If you’re looking to make a wise investment decision, you might be asking yourself: should I invest now or wait – The answer may depend on several factors, but one thing is certain, the current market is prime for real estate investments. Landmark projects are being developed in Toronto and across the GTA offering unique opportunities for savvy investors. A preconstruction project can offer the perfect opportunity to add a bit of home to your diversified investment portfolio.
Schedule your spot today for an upcoming educational webinar for groupe investors and individual investors where our investment specialists will provide a presentation on how to pick the right pre-construction condo and address all of your serious inquiries only Discover how you learn best in order to achieve a remarkable return on investment of up to 300%.
Guide why invest now in preconstruction project – Your questions answered !
Now is the time to invest in preconstruction – Why now?
Preconstruction vs Resale ?
What factors to consider to find a remarkable Pre-Construction project?
Evaluating credibility how to find lily of the valley ?
Invest now or wait in our prime landmark projects ?
Yalla lets talk about well planned pre-construction process and laugh and learn how to pick the preconstruction project that is the right fit for you and your investment goals. Going forward we will ensure how to make decision and how to write a cheque to secure your spot in the development project .
Benefits of preconstruction
Investing in a preconstruction project presents a unique investment opportunity in the property market. It’s similar to purchasing a house before it’s even constructed, and it can prove to be one of the most promising and safe investment options available.. That means picking a project that’s backed by a good developer and doing some research before you invest in any preconstruction project. By being careful, you can make sure your investment is a smart one and that you’ll get a good return on your money.
When choosing a condo based on a floor plan consider what you want and need like what you like think about the location, view, layout, the price tag and make sure it suits you .
Toronto pre-construction condos cost approximately $1500 per square foot. Forsure the prices will go up in the future, but you can still buy them at today’s prices. I will do search for you so you can also buy in areas where home values are likely to go up.
The market can fluctuate based on a variety of factors, including current bank interest rates, current economic conditions, and the supply and demand for housing in the area.
Preconstruction Best Investment Strategy 2023
If you are considering investing in commercial real estate, it’s essential to understand the characteristics of an investment property from both a user and an investor perspective. These perspectives can provide you with a comprehensive overview of what you need to know to make informed investment decisions.
One critical factor to consider is the risk and return for investment properties, which varies depending on the specific property type and market conditions. Additionally, acquiring preconstruction properties comes with general risks, such as project delays and unexpected cost overruns.
It’s important to note that investors are distinguished from users based on their intended use of the property. An investor typically purchases a property with the intention of leasing it out and generating rental income, while a user intends to utilize the property for conducting their business. Understanding these distinctions and risks can help you make more informed investment decisions and maximize your returns.
Pre construction condo deposit structure
First-time homebuyer can save money by taking advantage of extended payment terms, which allow them to spread out payments over a longer period of time. it takes 3 to 5 years to build the house. As an investor in new preconstruction condos I find the deposit structure and prolonged time to be highly attractive. Which is usually 15% to 20% of the total price.
Live mortgage free for 2 years
If you purchased a pre-construction condo today with a closing date set for 2025, you will have a two-year window during which you don’t need to be concerned about mortgage payments. During this period, your only financial obligation will be to pay the deposit in easy payment structure.
The common sort deposit structure
5% On Signing the Contract
5% 30 days
5% 90 days
5% 120 Days
5% on Occupancy
HST on Preconstruction Condos
The HST is a tax that must be paid when purchasing a new condo or home. This tax is added to the price by the builders. If you’re buying a home for yourself to live in it, you only have to pay the listed price.
However, if you are an investor, and you will lease the condo, in that case you must pay the HST approximately $24,000, which you can claim and can be refunded later when you show at least one year lease contract to Revenue Canada.
When you buy an assignment meaning buying a preconstruction contract from a previous buyer, you have to pay extra tax called HST, even if you plan to live in it.
What is land transfer tax in Toronto
Say for instance you are purchasing a pre-construction condo in Toronto for $1,000,000 as a first-time home buyer, your land transfer tax payment will be determined as follows:
Toronto Land Transfer Tax (TLTT) $12,000 – Applies to Toronto properties only
Provincial Land Transfer Tax (PLTT) $12,475 – Applies to all Ontario properties including Toronto
Total Land Transfer Tax (TLTT + PLTT) $24,475
Click here to confirm Toronto Ontario Tax Calculator
Preconstruction Closing Costs
When you buy a preconstruction condo in Toronto, you have to pay extra closing costs, around 5.5% of the purchasing price. This cost is related to the sales contract. Be that as it may be difficult to estimate the exact closing costs, as they typically depend on the specifics outlined in your agreement of purchase and sale with the builder.
When buying a pre-construction condo, the purchase agreement is a critical document that outlines the terms of the sale. It’s important to review this document carefully and make sure you understand all the terms and conditions before document signing.
Preconstruction contract cooling off period
You have ten days Preconstruction contract cooling off period to change your mind if you purchase a condo in preconstruction. During the cooling-off period, buyers can also have the purchase agreement reviewed by a lawyer or other professional. This can be a valuable opportunity to identify any potential problems with the agreement and make sure you fully understand the terms of the sale .
Also if you can’t afford it within the next three to five years, and you made a poor choice. You can withdraw within ten days.
Capped Levies or Land Development Charges
When you buy a pre-construction condo, you might have to pay extra for things like utilities, the environment, and development. If there is no cap, it can cost tens of thousands of dollars. Ask for a cap, and it could be anywhere from $6,000 to $9,000.
When you purchase a new condo that has not yet been constructed, there are two significant dates, the day you move in and the day the unit becomes yours. Until then, you’ll pay Interim Occupancy Rent, but not your mortgage. After a few months, when the building will be registered and you’ll have an official closing date, at which point you’ll begin paying for everything, including the mortgage.
What is assignment clause
To sell a pre-construction condo before it is built, it is beneficial to ask your Realtor for an assignment clause. The assignment clause is worth approximately $10,000 – $15,000. An assignment clause is a legal provision that lets you give ownership or contractual obligations to another party. When you buy an assignment agreement, you get a brand-new condo/home that is covered by a Tarion Warranty for seven years.
Right to Lease During Occupancy Clause
You may request your realtor to add the Right to Lease During Occupancy Clause, which has an estimated value of $1,500.
Utility Hookup Fees
When you purchase a new condo, you typically pay to connect utilities like gas, water, and electricity. Sometimes you pay a single fee for all connected utilities, and other times you pay separately for each one.
Condo Reserve Fund
Every condo building has a reserve fund that is used to cover ongoing maintenance and repairs. When buying a pre-construction condo, it’s important to make sure the developer has set aside an adequate amount of money for the reserve fund.
Condo preconstruction sale stages
Pre-construction sales typically involve three stages Platinum Launch, VIP Launch, and public Launch.
Platinum stage, the developer’s friends and family purchase the apartments first, followed by preferred real estate agents selling the remaining units at a reduced price. Typically, the best units sell quickly.
VIP stage where real estate agents and their clients can buy any apartments that haven’t been sold yet. It’s possible that the best ones are already gone, so the prices may be a little bit higher.
Public stage, those interested in making a purchase can go directly to the sales centre without the assistance of a realtor. The prices may be higher, and the most desirable apartments may already be gone.
When buying a pre-construction condos in Toronto a condo worksheet must be filled out. The worksheet includes questions regarding your occupation, desired condo type, and location. This information helps the developer understand what you’re looking for in a condo. It is important to answer question, so the builder can match customer preferences.
Return On Investment
ROI stands for “Return on Investment”. It is a financial metric that is used to measure the profitability of an investment relative to its cost. In other words, ROI is a way to evaluate the amount of return or profit that an investor is likely to receive on an investment, (how much money you’ve made from an investment compared to how much you spent on it.) the higher the percentage, the better the investment.
Capital appreciation refers to an increase in the value of an asset, such as a Preconstruction Condo, over time. It is the difference between the price at which the preconstruction condo was purchased and the higher price at which it is sold.
Leverage means using other people’s money like (Banks) to invest in preconstruction. This can make you more money if the preconstruction price goes up. It’s like borrowing money to buy your future home, but you have to pay it back later.
Passive income is money you get regularly without doing much work for it. It comes from things like renting out a house. You need to put in some efforts like buy a preconstruction condo, and then the rent keeps coming in without you having to do much.
Gain or Rent $37,200
Repair & Maintenance, Ongoing Expenses $1,200
Net Gain or Rent – Minus Cost of Repair & Maintenance and Ongoing Costs, Divided by Total Investment
Buy a Preconstruction Condo (Example of Rental Income for one year)
Let’s say you buy a condo for $1,000,000 and decide to finance it with a mortgage. You put down a 20% down payment of $200,000 and take out a mortgage for the remaining $800,000. And you rent out the condo for $3,000 per month, or $36,000 per year.
Here’s how you can calculate your return on investment (ROI) using leverage and capital appreciation:
Leverage ROI = Passive Income (Rent) / Total Investment ($800,000)
Total Investment = Condo Price – Down Payment
Total Investment = $1,000,000 – $200,000
Total Investment = $800,000
Leverage ROI = $36,000 (One year Rent) / $800,000 (Mortgage)
Leverage ROI = 4.5% I have estimated a significantly lower percentage, but in reality, it will be higher.
So, in this example, you would earn a 4.5% ROI from leverage meaning the money you have borrowed from the bank. This means that your rental income of $36,000 for the year would be 4.5% of your total investment of $800,000.
Capital Appreciation for Preconstruction Condo
Let’s consider the capital appreciation part of the equation. If the value of the preconstruction condo goes up by 7% in a year, and I’m guessing that, the growth will be even higher than that, but I want to be careful and not overestimate it.
Preconstruction Condo Price = Condo Price x (0.06% Capital Appreciation Rate)
Preconstruction Condo Price = $1,000,000 x ( 0.06%)
New Condo Price = $1,060,000
So, the condo would be worth $1,060,000 at the end of the year. If you decide to sell the condo at this price, you would make a profit of:
Profit = New Condo Price – Total Investment
Profit = $1,060,000 – $800,000
Profit = $260,000
Therefore, your ROI from capital appreciation would be: $260,000
Capital Appreciation ROI = Profit / Total Investment
Capital Appreciation ROI = $260,000 / $800,000
Capital Appreciation ROI = 32.5%
So, in this example, you would earn a 32.5% ROI from capital appreciation. This means that the increase in the value of the condo from $1,000,000 to $1,060,000 over the course of the year would be a 32.5% return on your total investment of $800,000.
Combine Leverage ROI + Capital Appreciation ROI
Overall, when you combine the ROI from leverage and capital appreciation, your total ROI for the year would be:
Total ROI = Leverage ROI (Rental) + Capital Appreciation ROI
Total ROI = 4.5% + 32.5%
Total ROI = 37% $36,000 + $260,000 = $296,000
So, your total ROI for one year would be 37% or $296,000.
Constructing Toronto Preconstruction Condo is like starting a puzzle business – it may seem overwhelming desire at first, but with the right pièces and a clear plan, you can create something amazing i guess!